Online Video, Slide Shows, and Audio
In the past I've provided links to various types of music and video available
free on the Web.
I created a page that summarizes those various links ---
http://www.trinity.edu/rjensen/music.htm

In late February, Charles Ferguson’s film – Inside
Job – won the Academy Award for Best Documentary. And now the film
documenting the causes of the 2008 global financial meltdown has made its
way online (thanks to the Internet Archive). A corrupt financial industry,
its corrosive relationship with politicians, academics and regulators, and
the trillions of damage done, it all gets documented in this film that runs
a little shy of 2 hours.

To watch the film, you will need to do the
following. 1.) Look at the bottom of the film. 2.) Click the forward button
twice so that it moves beyond the initial trailer and the Academy Awards
ceremony. 3.) Wait for the little circle to stop spinning. And 4.) click
play to watch film.

Inside Job (now listed in our Free Movie
Collection) can be purchased on DVD at Amazon. We all love free, but let’s
remember that good projects cost real money to develop, and they could use
real financial support. So please consider buying a copy.

Hopefully watching or buying this film won’t be a
pointless act, even though it can rightly feel that way. As Charles Ferguson
reminded us during his Oscar acceptance speech, we are three years beyond
the Wall Street crisis and taxpayers (you) got fleeced for billions. But
still not one Wall Street exec is facing criminal charges. Welcome to your
plutocracy…

Jensen Comment
Makes us wonder if the Top 10 porno videos leave the top 10 YouTube video
statistics in the dust. However, I've no idea how to find the Top 10 porno
videos of all time, and I wouldn't believe the numbers in any case since most
porno sites are run by some really dangerous Webmasters of low integrity.

Common sense is also inclined to conclude that
individual successes (and failures) are determined by inherent qualities rather
than by unpredictable circumstance. Mr. Watts asks why the “Mona Lisa” is the
most admired painting in the world today—why most ­people believe it to possess
unique, timeless features that set it apart.Duncan Watts as quoted by
Christopher Chabris below

During World War II the U.S. military surveyed
600,000 soldiers for a ­research project. Two of its many findings were that
better-educated soldiers suffered more psychological distress from their
wartime experience than their less-educated comrades and that soldiers from
rural areas were happier than those from urban backgrounds. These
conclusions are hardly surprising: Effete intellectuals should have more
trouble handling the stress of war, and farmers are more accustomed than
city folk to harsh, army-like conditions. What could be more obvious? A
grandstanding politician could easily ­denounce the entire study—or the
entire enterprise of social-science research—as a massive waste of money on
the basis of "discoveries" like these.

Wait, change that: The military study actually
arrived at the opposite conclusions. The sociologist Paul Lazarsfeld—aiming
to show how "common sense" justifications can be found for ­almost any
conclusion—pulled the switcheroo in a 1949 review of the survey's results.
In fact, educated soldiers were less troubled than uneducated ones, and
urban soldiers were happier than their rural counterparts. The real findings
are just as explainable as the fake ones; perhaps education equips us to
cope with stress and urbanites are more­ ­accustomed to living in close
quarters.

Duncan Watts uses Lazarsfeld's ruse to frame the
central concern of "Everything Is Obvious": that common sense is a
shockingly unreliable guide to truth and yet we rely on it virtually to the
­exclusion of other methods of reasoning. Mr. Watts, a former sociology
professor and physicist who is now a researcher for Yahoo, has written a
fascinating book that ranges through psychology, economics, marketing and
the science of social networks.

He is especially interested in the mistakes we make
when we reason about how people influence one another—such as our tendency
to think of groups in terms of representative or important members rather
than as whole entities. The writings of New Yorker writer Malcolm Gladwell
take heavy fire in "Everything Is Obvious." Mr. Gladwell's book "The Tipping
Point" (2000) argued that social epidemics are launched by a few
"exceptional people" who possess the ability to make ideas go viral. When
­hipsters suddenly started wearing Hush Puppies shoes, Mr. Gladwell's story
goes, they started a fashion trend that ­rescued the brand from terminal
uncoolness and made it profitable again.

"The Tipping Point" reads so well that its
explanations have been widely accepted. At first blush they seem novel, but
they mainly reflect what common sense tells us about how social networks
work. The problem with the Hush Puppies story is that the computational
analysis of actual networks, such as a study that Mr. Watts conducted of 74
million Twitter message chains, shows that influencers, if they exist, are
more common and less special than Mr. Gladwell thinks. Paying Kim Kardashian
$10,000 to tweet about a product may well buy less buzz than paying 10,000
ordinary Twitter users $1 each. The Hush Puppies tale is a just-so story
­written after the fact—and an example of what Mr. Watts calls the "special
­people" fallacy.

Common sense is also inclined to conclude that
individual successes (and failures) are determined by inherent qualities
rather than by unpredictable circumstance. Mr. Watts asks why the "Mona
Lisa" is the most admired painting in the world today—why most ­people
believe it to possess unique, timeless features that set it apart.

Before the 20th century, the "Mona Lisa" wasn't
even the most popular painting in the Louvre. But in 1911 it was stolen,
smuggled to Italy and exhibited widely before being returned to France,
whereupon Marcel Duchamp defaced a reproduction of it and labeled his work
with an obscene pun. The painting rocketed to fame, its pigments and
brushstrokes unchanged. The "Mona Lisa" is the artistic equivalent of the
investor who did nothing special until he got lucky a few years (or
quarters) in a row and was fêted as a genius. Ecclesiastes told us that time
and chance happeneth to all, but we easily forget.

The enterprise of prediction-making is another
casualty of the limits of common sense. Mr. Watts suggests that the entire
field of business strategy suffers from a delusion that the future can be
forecast with enough numerical precision to enable accurate planning. One
solution he endorses is a systematic process of imagining detailed
alternative narratives of the future. Such an exercise may have the salutary
effect of ­raising possibilities that were not ­considered seriously, but it
risks playing into our bias to believe well-crafted, emotionally satisfying
stories that aren't likely to come true.

"There used to be a joke in Paris. What is the
difference between the Chief Rabbi in France and the Cardinal of Paris ? The
Cardinal speaks Yiddish!"

Jean Marie Cardinal Lustiger was buried yesterday.
He died this week of cancer. He was born almost 81 years ago to Polish
parents who ran a dress shop in Paris. When the German army marched into
their city, his parents sent him and his sister into hiding with a Catholic
family in Orleans. Their mother was captured and sent to Auschwitz.

In 1999 as Cardinal of Paris , Jean Marie Lustiger
took part in reading of the names of France 's day of remembrance of Jews
who had been deported and murdered. He came to the name of Gesele
Lustiger,paused, teared and said, "my Mama!" The effect in France during a
time of revived anti-Semitism was electric.

He was just 13 and in hiding when he converted to
Catholicism, not to escape the Nazis he always said, because no Jew could
escape by conversion, and not of trauma, he said. Among his most
controversial observation, I was born Jewish and so I remain, even if that
is unacceptable for many. For me, the vocation of Israel is bringing light
to the goyem. That is my hope and I believe that Christianity is the means
for achieving it.

There were a great number of Rabbi's who consider
his conversion a betrayal, especially after so many European Jews so
narrowly escaped extinction. Cardinal Lustiger replied, "to say that I am no
longer a Jew is like denying my father and mother, my grandfathers and
grandmothers. I am as Jewish as all other members of my family that were
butchered in Auschwitz and other camps."

He confessed to a biographer that he had a
spiritual crisis in the 1970's provoked by persistent anti-Semitism in
France. He studied Hebrew and considered emigrating. He said, "I thought
that I had finished what I had to do here and I might find new meaning in
Israel." But just at that time the Pope appointed him bishop of Orleans . He
found purpose in the plight of immigrant workers. Then he was elevated to
Cardinal, the Archbishop of Paris .

Jean Marie Lustiger was close to the Pope. They
shared a doctrinal conservatism. He also battled bigotry and
totalitarianism. For years, Cardinal Lustiger's name was among those who was
considered to succeed John Paul. Without putting himself forth, the Cardinal
joked that few things would bedevil bigots more that a Jewish Pope. They
don't like to admit it, but he said, "What Christians believe, they
got--through Jews."

The funeral for Cardinal Lustiger began at Notre
Dame Cathedral yesterday with the chanting of Kaddish, the Jewish prayer for
the dead.

American Express has a full-page ad in today’s
Times offering a savings account yielding 1.15 percent.

These days that is a good rate, a fact the people
of my generation find astonishing. Such amazingly low rates cause great
anxiety for those who saved money in the past and now find it yields so
little.

I did a little arithmetic. My son is an 18-year-old
college freshman. If he puts $100 into such an account now, and rates remain
constant, he will have doubled his money in time for his 79th birthday
party.

Of course, if you are investing for a child in
kindergarten, there is still hope. A $100 investment today would double
about the time he or she goes on Medicare.

For the well-off, this could be the best tax day
since the early 1930s: Top tax rates on ordinary income, dividends, estates,
and gifts will remain at or near historically low levels for at least the
next two years. That's thanks in part to legislation passed in December 2010
by the 111th Congress and signed by President Barack Obama.

"This is clearly far and away the most generous tax
situation that's existed," says Gregory D. Singer, a national managing
director of the wealth management group at AllianceBernstein (AB) in New
York. "It's a once-in-a-lifetime opportunity."

For the 400 U.S. taxpayers with the highest
adjusted gross income, the effective federal income tax rate—what they
actually pay—fell from almost 30 percent in 1995 to just under 17 percent in
2007, according to the IRS. And for the approximately 1.4 million people who
make up the top 1 percent of taxpayers, the effective federal income tax
rate dropped from 29 percent to 23 percent in 2008. It may seem too
fantastic to be true, but the top 400 end up paying a lower rate than the
next 1,399,600 or so.

That's not just good luck. It's often the result of
hard work, as suggested by some of the strategies in the following pages.
Much of the top 400's income is from dividends and capital gains, generated
by everything from appreciated real estate—yes, there is some left—to stocks
and the sale of family businesses. As Warren Buffett likes to point out,
since most of his income is from dividends, his tax rate is less than that
of the people who clean his office.

The true effective rate for multimillionaires is
actually far lower than that indicated by official government statistics.
That's because those figures fail to include the additional income that's
generated by many sophisticated tax-avoidance strategies. Several of those
techniques involve some variation of complicated borrowings that never get
repaid, netting the beneficiaries hundreds of millions in tax-free cash.
From 2003 to 2008, for example, Los Angeles Dodgers owner and real estate
developer Frank H. McCourt Jr. paid no federal or state regular income
taxes, as stated in court records dug up by the Los Angeles Times.
Developers such as McCourt, according to a declaration in his divorce
proceeding, "typically fund their lifestyle through lines of credit and loan
proceeds secured by their assets while paying little or no personal income
taxes." A spokesman for McCourt said he availed himself of a tax code
provision at the time that permitted purchasers of sports franchises to
defer income taxes.

For those who can afford a shrewd accountant or
attorney, our era is rife with opportunity to avoid, or at least defer, tax
bills, according to tax specialists and public records. It's limited only by
the boundaries of taste, creativity, and the ability to understand some very
complex shelters.

Millions of taxpayers are filling out their tax
returns over the next several days. Economists are still not sure whether
taxpayer honesty or fear of the Internal Revenue Service explains why
taxpayers’ income reporting is pretty accurate.

But with the Treasury spending more than ever, it’s
important to know why people pay their taxes and what will continue to
motivate them to pay in the future.

It’s difficult to get exact numbers on income tax
cheating, but I.R.S. studies (read about them and other tax-evasion analysis
in Prof. Joel Slemrod’s paper) suggest that reporting of wages and salaries
is so high that the Treasury receives 99 percent of what it would if all
taxpayers were honest about that income (see Page 2 of this I.R.S. report).

You might think that people pay taxes merely to
stay out of trouble with the I.R.S. But 99 percent of people are not audited
by the I.R.S., and even the remaining 1 percent are penalized only about 10
percent of the amount underpaid. (The I.R.S. is, however, increasing its
audits of the wealthy.)

From a financial point of view, underpaying taxes
looks like a high expected return investment: a 99 percent chance of keeping
the, say, $10,000 that you underpaid the Treasury and a 1 percent chance of
having to pay the $10,000 plus a $1,000 penalty (on average, you get $9,790
for every $10,000 you hold back from the Treasury).

Some economists have tried to reconcile low
penalties with high compliance, arguing that people obey the tax laws for
non-economic reasons – people want to be honest and pay their share. Or
perhaps individuals don’t understand that any one person’s tax payment is
not critical to the functioning of our government, while the aggregate of
millions of tax payments are.

To the extent that much of the Treasury’s revenue
arrives because taxpayers are honest, public policy might not want to take
honesty for granted. For example, the Treasury may receive less revenue over
time if taxpayers increasingly distrust government because they perceive
their tax dollars are wasted.

There’s some truth to the honesty theory (I’ll
write next week about a study of integrity and tax compliance), but tax
compliance still responds to incentives. When the probability of audit
falls, compliance falls.

It’s difficult for the I.R.S. to verify many types
of business income: as a result the amount of proprietor, rent and royalty
income that is reported is actually less than the amount unreported.

Nanny taxes -– self-employment taxes paid for
household employees -– are another type of tax on which many people cheat,
and enforcement on this front is weak. Though on this and other tax issues,
high-profile people –- like political appointees –- should beware.

Among those whose failure to pay various taxes were
widely publicized were Tom Daschle, President Obama’s nominee as secretary
of health and human services; Treasury Secretary Timothy Geithner, and Zoe
Baird, President Clinton’s nominee for attorney general.

Jensen Comment
Note that there's a huge difference between "cheating" and playing by the rules
to minimize/avoid taxation. Cheating is especially common in trades where cash
is paid without filing W-2 or 1099 forms such as paying house cleaners for a few
hours work per week, hiring day laborers off the streets, cash tipping, paying
guys who plow snow from your driveway, and crime dealings, including drug
dealings and prostitution. The IRS has made it increasingly more difficult to
under report income. For example, most casinos now withhold taxes from
significant winnings, although some players may walk away without reporting
small winnings. House cleaners now may want to have their earnings reported for
Social Security purposes.

Tax cheating and most financial crimes could be eliminated in a cashless
world of all-electronic transfers, but don't hold your breath for our
legislators to agree to that solution to crime. Too many of them might might be
prevented tax cheating and crime in a cashless society. Smart criminals now are
either avoiding bank accounts or laundering money before depositing it into bank
accounts.

Tax cheating is much less of a problem in the U.S. than in most other nations
such as Greece and Italy where tax cheating is virtually a way of life. Studies
show that most U.S. taxpayers have greatly exaggerated fears of full tax audits,
which is comes as a delight to tax collectors who better understand the real
odds of being audited. Of course there are those pesky partial audits and the
things taxpayers can do to increase the odds of a partial audit such as taking a
huge deduction for a home office. Many people are likely to overpay taxes out of
fear of audits such as people who qualify for more deductions than they actually
declare simply to avoid the stress of worrying about letters from the IRS.

I should preface this by stating that I think it is unfair in states that
have sales taxes on such businesses as bookstores and sporting goods stores to
not be able to tax sales on books and air bicycles purchased through Amazon and
LL Bean. Be that as it may, it will probably take a U.S. Supreme Court decision
to allow states to tax sales from such vendors as Amazon and LL Bean.

In the meantime states like Illinois and Massachusetts that try to collect taxes
from online vendors probably are only killing jobs in their states. Amazon in
particular has added tens of thousands of "affiliates" around the world that
carry inventories of new and used merchandise that can be sold and billed
through Amazon. For example, if I buy a used copy of the book War and Peace
from Jane Doe in Illinois, Jane Doe actually sends her copy of the book to me
and collects her selling price from Amazon. Similarly, a hardware store in
Illinois can ship a new air conditioner to me and be paid through Amazon where I
placed the order. What Governors Pat Quinn and Duval Patrick are doing is simply
blocking sales of Amazon affiliates in their states. Killing off the Jane Doe
sellers hurts a little, but killing off the corporate affiliates will put people
out of work in Illinois and Massachusetts.

Of course online vendors like Wal-Mart, Sears, and Jggock Pennaaey charge an
Internet sales tax in Illinois and Massachusetts because they also have big
stores in those states. Residents of selected states that do not have sales
taxes (I think there are five such states including my state) do not have to pay
any sales taxes on online purchases from anybody.

Amazon is different from Wal-Mart, Sears, and Jggock Pennaaey unless Amazon
has a warehouse in a particular state. Illinois and Massachusetts, however, are
trying to kill off Amazon affiliates. Whether this is just or unjust will have
to be ultimately decided in our now sharply divided U.S. Supreme Court. Justice
Kennedy upon whom swing votes rest is now is the most powerful person in the
United States.

I think Pat Quinn and Duval Patrick should wait and see what happens to the
pending New York lawsuit on this issue.

Governor Pat Quinn recently added to his reputation
as America's most taxing politician by signing a law applying the state's
6.25% sales tax to Internet purchases made in Illinois. Within hours,
Amazon, the online book and merchandise seller, announced it would
discontinue using any of its 9,000 Illinois small business affiliates to
avoid having to collect the tax. Congratulations, Governor.

The issue of whether and how states should tax
Internet sales is back as one of the hottest in state legislatures.
Colorado, New York, North Carolina and Rhode Island already impose some
version of what has become known as the "Amazon tax," and at least a dozen
other deficit-plagued states are advancing similar bills. This political
brawl unites liberals with brick-and-mortar retailers, such as Wal-Mart,
Best Buy and Target, against taxpayers and such online retailers as Amazon
and Overstock. Internet sales reached $165 billion last year and have been
growing by nearly 15% annually.

The first issue is whether the Amazon tax is
constitutional. New York's law is now being challenged in court as a
violation of the Supreme Court's landmark 1992 Quill decision. In that case
the High Court ruled that a state cannot impose a tax on a company if it
does not have a physical presencein that
state.

Corporate taxes –- or rather their absence –- have
jumped to the top of the news in recent weeks, even drawing humorous
commentary from Jon Stewart and Bill Maher. Many Americans are outraged to
learn that some profitable American corporations pay little or no taxes in
the United States, especially when corporate profits enjoyed their fastest
growth ever in 2010.

Shouldn’t the government raise the corporate tax
rate to require corporations to contribute their “fair share” to deficit
reduction and to enhance the progressivity of the tax system? The answer is
no.

In today’s world of mobile capital, increasing the
corporate tax rate would be a bad way to generate revenues for deficit
reduction, a bad way to increase the progressivity of the tax code and a bad
way to help American workers and their families.

After the 1986 tax overhaul, the United States had
one of the lowest corporate tax rates among the advanced industrial
countries. Since then, these countries have been slashing their rates both
to attract investment by American and other foreign companies and to
discourage their own companies from shifting operations and profits to
foreign locations offering even lower tax rates.

The resulting “race to the bottom” in corporate tax
rates has made the United States a less attractive place for both domestic
and foreign investments, and that has encouraged American multinational
companies to shift more of their income abroad, in ways permitted by the
United States tax code.

The United States now has the highest corporate tax
rate of all developed countries –- and is alone in its attempt to impose
taxes on the worldwide income of its resident corporations. All other
developed countries and most major emerging countries have adopted a
territorial system that exempts most foreign income of their resident
corporations from taxes.

On the right side of the map near the top pass the mouse pointer
over the menu choice Road
A drop down menu appearsChoose Birds Eye View
The map changes to an aerial view (not a real time current view, but a
clear view nevertheless)

Since I have a wheel on my mouse I can zoom in or out simply by
turning the wheel
The New England Baptist Hospital is the large building to the upper left
of the red balloon

I tried this for the address in Baltimore where my friend Barry Rice lives.
I then got a good view of his townhouse.

I found that it's not always possible to get a Bing map to come up for an
address
For example, the Cannon Mountain Ski Resort mailing address is
9 Franconia Notch State Park, Franconia, NH 03580
Using the above address I do not get an option for a Bing map
But you can use the Franconia Hardware address
334 Main St., Franconia 03580

On the right side of the map near the top pass the mouse pointer
over the menu choice Road
A drop down menu appearsChoose Birds Eye View
The map changes to an aerial view (not a real time current view, but a
clear view nevertheless)

On the map proceed southwest on I-93 until it changes to Franconia
Notch Parkway
You are now in the mountain pass of Franconia Notch State Park
Cannon Mountain Ski Resort is beside Echo Lake
Cannon Mountain still has some snow and will not end the skiing until
April 8 this year

When I tried this on our cottage I got a map but our cottage was hidden
beneath the clouds on the day this aerial view photo was taken
190 Sunset Hill Road, Sugar Hill, NH 03586

The Bing areal views are photographs that do not change from day to day such
that you will still get a cloudy view of Sugar Hill even if we're having a clear
day.

I then move about with my mouse pointer and zoom with the wheel of my mouse.
Wow --- I can zoom in on the New England Baptist Hospital without having to
enter an address (as long as I know where it's located in the Boston area)

Google does almost nothing interesting in travel
search.Bingoffers a much more compelling travel search experience
and today
added a new little featurethat makes me want to
use it even more.

Search on Bing for the phrase "fly to..." and the
name of a major destination city and you will now see an automatic display
of the best dates to fly from where you are to that place, with the lowest
price for a round trip ticket and advice about whether the price is likely
to go up or down if you waited to buy the ticket later. It's really cool.

2- Grab the little guy above the + sign on the
slider and drag him to the street location you want to view;

3- That will give you a 360 degree view of the
street location if you click and drag (I also like to click the + sign at
the top right of the picture to view it in full screen.);

4- Click anywhere on the street where your cursor
gets a circle and you can “drive” anyplace that Google filmed.

Of course, Google is not nearly as good at showing
you the exact map location for an address as is MapQuest. Therefore, you may
be up to ¼ mile off in what you are looking at as was my experience when I
“drove by” Bob’s house.

Hope this answered your question. The primary
reason I posted the picture (from a screen capture) of Bob’s house was to
encourage AECM subscribers to use the “drive” feature in Google maps.

Barry Rice

April 1, 2011 reply from David Fordham

Of course, this assumes that the address has been
"driven by" by Google.

I don't know how much of the U.S. has been "driven by" -- It appears that
most urban areas in large cities are covered, but most of the rural U.S. is
not. For example, I tried six of my friends here in the Shenandoah Valley,
plus my sister's in rural Georgia, and even my own, and none of them were
shown.

My own address shows up correctly on Google maps (the street has been there
for over 150 years -- Lee and Jackson both rode down the street during the
Civil War on their way over Brown's Gap ... the farmhouse behind us was
built in 1790 -- and our house was built in 1984.) But alas, no pictures
from Google.

But my mother's house in suburban Jacksonville showed up just fine, as did
my daughter's in suburban Seattle, and my son's in Fort Lauderdale.

Perhaps a few more years and the Google picture truck will get around making
it out of the cities to the more out-of-the-way places. For now, it's nice
to live out in the country. I'm happy in spite of the lack of a Google
picture, I love my rural lifestyle. When I went out to the mailbox to get
the paper this morning, I heard the horses and cows down the street
announcing the arrival of the neighbor kids' schoolbus.

Jensen Comment
The picture of my mail box that Barry obtained using Google Maps Street View was
not a current picture where my mail box in deep in snow. The picture must've
been taken by Google sometime in early June when the snow was gone and the wild
roses had not yet started to bloom. Hence, do not expect that the Street View
picture will be a current picture.

Louis Mathern reported that whenever Google got a picture of his mother's
mailbox, Google also photographed his mother getting the mail. Now that's a bit
scary.

Salman Khan is the founder and faculty of Khan
Academy http://www.khanacademy.org/ a not-for-profit educational
organization. With the stated mission “of providing a high quality education
to anyone, anywhere”, the Academy supplies a free online collection of over
2,000 videos on mathematics, history, finance, physics, chemistry,
astronomy, and economics.

In late 2004, Khan began tutoring his cousin in
mathematics using Yahoo!’s Doodle notepad. When other relatives and friends
sought his tutorial, he decided it would be more practical to distribute the
tutorials on YouTube. Their popularity there and the testimonials of
appreciative students prompted Khan to quit his job in finance in 2009 and
focus on the Academy full-time.

Khan Academy’s channel on YouTube http://www.youtube.com/user/khanacademy
has 45+ million views so far and it’s one of YouTube’s most successful
academic partners.

In September 2010, Google announced they would be
providing the Khan Academy with $2 million to support the creation of more
courses and to enable the Khan Academy to translate their core library into
the world’s most widely spoken languages, as part of Project 10^100,
http://www.project10tothe100.com/.

Continued in article

1,400+ Open Sharing "Tutorials" On YouTube from a Harvard Business School
Graduate
Khan Academy Home Page ---
http://www.khanacademy.org/
This site lists the course categories (none for accounting)

Statement of Lynn E. Turner Before the Senate Subcommittee on Securities,
Insurance and Investment;
OnThe Role of the Accounting Profession in Preventing Another Financial Crisis
Dirksen Senate Office Building
April 6, 2011

I have written tens of thousands of tidbits over the years. Aside from my
tidbits on wars, deficits/entitlements, and unemployment, I think my most
depressing tidbits are on the corrupted real estate deed registries of virtually
all counties in the 50 states if America. The major reason for this corruption
is that, after the subprime bubble burst in 2008, megabanks and Wall Street
brokerage houses lost track of mortgage paperwork on millions of real estate
parcels. These banks/brokerages then forged new copies of the mortgages, often
with fictitious names of bank officials where the loans originated. When these
properties were then foreclosed or otherwise resold to new buyers, the forged
mortgages became part of recorded deeds, thereby corrupting the deed registries
across the entire United States.

If there was a question about whether we're headed
for a second housing shock, that was settled last week with news that home
prices have fallen a sixth consecutive month. Values are nearly back to
levels of the Great Recession. One thing weighing on the economy is the huge
number of foreclosed houses.

Many are stuck on the market for a reason you
wouldn't expect: banks can't find the ownership documents.

Who really owns your mortgage?Scott Pelley explains a bizarre aftershock of the U.S. financial
collapse: An epidemic of forged and missing mortgage documents.

It's bizarre but, it turns out, Wall Street cut
corners when it created those mortgage-backed investments that triggered the
financial collapse. Now that banks want to evict people, they're unwinding
these exotic investments to find, that often, the legal documents behind the
mortgages aren't there

Registered deeds keep legal track over the years of all real estate in the
United States. Often the owners have taken out mortgages that give lenders
priority claims on the real estate ownership when owners default on mortgage
lending contracts. It's important to note that names of mortgage investors,
along with the property owners, are written into the recorded deeds. Before a
buyer purchases real estate the chronological records of recorded deeds on the
property are generally searched by legal experts who then certify and sometimes
insure that the buyer will have a clear title to the purchased property.

If mortgages referenced in recorded deeds are forged, the recorded deeds are
thereby corrupted. Present owners accordingly do not have clear titles to the
purchased real estate. This includes John and Jane Doe now living in their home
at 123 Main Street. It also includes Fannie Mae, Freddie Mack, Goldman Sachs,
Bank of America, JP Morgan, and most of the other megabanks inside and outside
the United States. All are waiting for former owners to file lawsuits claiming
damages because of forged documents (including lawsuits from owners who simply
abandoned their houses because they could not make the mortgage payments and
those that got forced out by foreclosure proceedings).

The FDIC claims that probably the only way out of this mess is for the large
banks and brokerages who in one way or another are responsible for the document
forgeries to pay tens of billions into a "clean up fund" to be administered by
the government to make claimants accept cash settlements and relinquish their
rights to sue over forged or missing documents. This may be the only way to
clear the titles to registered deeds, including the deeds on millions of empty
homes that now cannot be sold until the titles are cleared of the forged
recorded paperwork.

A Summary of How This Mess Came About

1.
The main cause of this mess roots back to a time when banks and mortgage
companies that initially approve mortgage contracts commenced selling all their
mortgage investments to downstream investors like Fannie Mae, Freddie Mac, Bear
Stearns, Lehman Brothers, Merrill Lynch, and virtually all the large
international banks and Wall Street brokerages. Some like Bank of America did
not directly buy many of these downstream mortgages but later inherited millions
of mortgages such as when Bank of America bought the troubled Countrywide and JP
Morgan bought the troubled Wachovia as part of the TARP deals engineered by the
U.S. Treasury Department. It took until 2011 for the FDIC to finally
mandate that original lenders must retain "some skin" in the mortgages sold
downstream (currently at least 5% of the financial risk skin). That was not the
case when the subprime bubble burst in 2008.

2.
Another leading cause was the common 1990s practice of issuing subprime interest
rate mortgages where interest in the early years was below prime rates with a
clause that higher rates would eventually kick in several years down the road.
Even current owners were tempted to abandon their fixed rate mortgages and
refinance with subprime mortgages with the intent of flipping their homes before
the higher rates kicked in with payments they could not afford. The plan was to
sell their houses at huge gains and move up the hill to bigger houses and better
neighborhoods. All of this was predicated on the assumption that the price
bubble in real estate would never burst. But in 2008 it did burst and millions
of home owners could no longer make their mortgage payments when the subprime
rates gave way to double-digit rates. Low income people defaulted in droves, but
higher income people also defaulted. Some very high income people bought
mansions on the hill at subprime rates hoping to turn those mansions over for
enormous profits as long as housing prices in America kept going up and up. CBS
Sixty Minutes captured the essence of what happened when the bubble burst.

CBS Sixty Minutes featured how bad things became when poison was added to loan
portfolios. This older Sixty Minutes Module is entitled "House of Cards"
---
http://www.cbsnews.com/video/watch/?id=3756665n&tag=contentMain;contentBody
This segment can be understood without much preparation except that it would
help for viewers to first read about Mervene and how the mortgage lenders
brokering the mortgages got their commissions for poisoned mortgages passed
along to the government (Freddie Mack and Fannie Mae) and Wall Street banks. On
some occasions the lenders like Washington Mutual also naively kept some of the
poison planted by some of their own greedy brokers.
The cause of this fraud was separating the compensation for brokering mortgages
from the responsibility for collecting the payments until the final payoff
dates.

3.
The eventual downstream owners of these risky subprime mortgages invented a way
of diversifying default risk by putting together and selling portfolios of
mortgages known as Collateralized Debt Obligation portfolios. Buyers included
many wealthy investors in the Middle East and Asia. Forest Gump describes a CDO
portfolio as a box of chocolates with mostly small pieces of good mortgages with
a few turds thrown in (small pieces of mortgages are likely to go into default
by owners who cannot afford their mortgage payments). Note that a CDO portfolio
does not 100% of any mortgage investment. Rather it contains like a 1% piece of
a mortgage spread over 100 CDO portfolios. This is important because this
slicing and dicing shredding of financial risk is where much of the original
paperwork got lost.

Mortgage Backed Securities are like boxes of
chocolates. Criminals (bankers and brokers)
on Wall Street and one particular U.S. Congressional Committee stole a few
chocolates from the boxes and replaced them with turds. Their criminal buddies
at Standard & Poors rated these boxes AAA Investment Grade chocolates. These
boxes were then sold all over the world to investors. Eventually somebody bites
into a turd and discovers the crime. Suddenly nobody trusts American chocolates
anymore worldwide. Hank Paulson now wants the American taxpayers to buy up and
hold all these boxes of turd-infested chocolates for $700 billion dollars until
the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall
Street criminals who stole all the good chocolates are not being investigated,
arrested, or indicted. Momma always said: "Sniff the chocolates first Forrest."
Things generally don't pass the smell test if they came from Wall Street or from
Washington DC.Forrest Gump as quoted at
http://newsgroups.derkeiler.com/Archive/Rec/rec.sport.tennis/2008-10/msg02206.html

Videos 2 and 3
Inside the Wall Street Collapse (Parts 1 and 2) first shown on March 14,
2010

My wife and I watched Videos 2 and 3 on March 14, 2010. Both videos feature
one of my favorite authors of all time, Michael Lewis, who hhs been writing
(humorously with tongue in cheek) about Wall Street scandals since he was a bond
salesman on Wall Street in the 1980s. The other person featured on in these
videos is a one-eyed physician with Asperger Syndrome who made hundreds of
millions of dollars anticipating the collapse of the CDO markets while the
shareholders of companies like Merrill Lynch, AIG, Lehman Bros., and Bear
Stearns got left holding the empty bags.

Steve Kroft examines the complicated financial instruments known as credit
default swaps and the central role they are playing in the unfolding economic
crisis. The interview features my hero Frank Partnoy. I don't know of
anybody who knows derivative securities contracts and frauds better than Frank
Partnoy, who once sold these derivatives in bucket shops. You can find links to
Partnoy's books and many, many quotations at
http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds

For years I've used the term "bucket shop" in financial securities marketing
without realizing that the first bucket shops in the early 20th Century were
bought and sold only gambles on stock pricing moves, not the selling of any
financial securities. The analogy of a bucket shop would be a room full of
bookies selling bets on NFL playoff games.
See "Bucket Shop" at
http://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

5.
So where does mortgage/deed forgeries enter into the picture.
It turns out that the Wall Street brokerage houses and megabanks that ended up
downstream with the mortgages and then sliced and diced them into new
securitization instruments called Mortgage Backed Obligation (MBO) portfolios
completely lost track of the millions original mortgage paper work that they
were shredding into millions of MBOs. Then when owners defaulted on their
original subprime mortgages the megabanks and brokerages, gasp, could not find
the original paperwork. Even worse, when responsible homeowners sold their homes
and wanted to pay off their mortgages the megabanks and brokerages also could
not find the original paperwork.

Horrors!
What's a megabank to do when new deeds have to be recorded and the current
recorded deeds/mortgages cannot be located. What the megabanks essentially
did was forge new paperwork. Not wanting to implicate their own employees in
this fraud they hired sleazy mortgage servicing companies who in turn hired high
school kids at minimum wage to forge thousands of names per hour (including
forged notary public signatures). The megabanks now claim they did not know
these forgeries were taking place, but if you believe this I've got some ocean
front property in Arizona and the Brooklyn Bridge that I would like to sell to
those megabanks.

If there was a question about whether we're headed
for a second housing shock, that was settled last week with news that home
prices have fallen a sixth consecutive month. Values are nearly back to
levels of the Great Recession. One thing weighing on the economy is the huge
number of foreclosed houses.

Many are stuck on the market for a reason you
wouldn't expect: banks can't find the ownership documents.

Who really owns your mortgage?Scott Pelley explains a bizarre aftershock of the U.S. financial
collapse: An epidemic of forged and missing mortgage documents.

It's bizarre but, it turns out, Wall Street cut
corners when it created those mortgage-backed investments that triggered the
financial collapse. Now that banks want to evict people, they're unwinding
these exotic investments to find, that often, the legal documents behind the
mortgages aren't there

Continued in article

6.
So where does this leave us now and why is this so serious?

This leaves us with millions of corrupted deed registries containing
references to forged documents. Current owners do not have clear titles to their
properties, including megabanks holding corrupted titles to vacant homes.

Currently 13% of all the houses in America are vacant, including millions of
double wides in mobile home parks and millions of mansions in every county of
the United States. Owners, including megabanks, of these vacant houses do not
have clear title do to forged documents. The houses cannot be sold with
corrupted titles such that they sit vacant year after year.

Mold takes hold in the walls and ceilings of vacant homes that are not
properly cooled and dehumidified in hot summer months and warmed in frigid
winter months. The mold spreads more and more until it reaches toxic levels
where real estate inspectors will not allow the homes to be sold. The bull
dozers have to push through those double wides and even those mansions on the
hill.

Now lawyers are hovering like vultures to commence the lawsuits on behalf of
former owners such as owners thrown out of foreclosed houses and new owners who
do not have clear titles to properties purchased in good faith --- http://wgroup.ning.com/

The FDIC is proposing a forged document cleanup fund where the megabanks
responsible for using forged paperwork put up tens of billions of dollars into a
fund to pay off the damaged former owners so that titles can be cleared on
millions of homes now having corrupted deeds on file due to those forgeries.
It's a little like how the BP fund in being administered for oil spill damages
to employees and businesses along the Gulf Coast, only the forged mortgage fund
has to be much, much, much larger.

What a mess!

Disability Entitlements: Being Declared Disabled has More Benefits Than
Working
Between the ages of 0 and 200, disability pay and medical payments go on
virtually forever
The system is racked with fraud
Cost averages $1,500 annually for each and every taxpayer in the U.S.
"College Enrollment Fell Slightly in 2010," by Catherine Rampell, The New
York Times (Economix), April 9, 2011 ---
http://economix.blogs.nytimes.com/2011/04/09/college-enrollment-fell-slightly-in-2010/

In the worst economic times of the 1950s and ’60s,
about 9 percent of men in the prime of their working lives (25 to 54 years
old) were not working. At the depth of the severe recession in the early
1980s, about 15 percent of prime-age men were not working. Today, more than
18 percent of such men aren’t working.

That’s a depressing statistic: nearly one out of
every five men between 25 and 54 is not employed. Yes, some of them are
happily retired. Some are going to school. And some are taking care of their
children. But most don’t fall into any of these categories. They simply
aren’t working. They’re managing to get by some other way.

For growing numbers of these men, the federal
disability program is a significant source of support. Disabled workers —
men and women — received $115 billion in benefits last year and another $75
billion in medical costs. (Disability recipients become eligible for
Medicare two years after starting to receive benefits.) That $190 billion
sum is the equivalent of about $1,500 in taxes for each American household.

Jensen Comment
Students that face licensure examinations shortly after graduating, such as the
CPA Examination, Nursing Examination, etc. often purchase review course
materials or even enroll in post-graduate licensure examination coaching
courses. These review materials and coaching courses can be both informative and
misleading. If students find that their college courses left enormous gaps in
what they need know for licensing examinations it might be a rude awakening in
terms of their perceptions about what they learned for their chosen careers. But
they should carefully examine the real intent of curriculum they chose in
college and how well the college accomplished the goal set out in that
curriculum.

The Other Side of the Coin
If graduates feel that they learned over 90% of what they need to know for their
licensing examinations, their perceptions may be misleading about what they
should've gotten out of a college degree. College education is supposed to focus
on much more than career training. If their particular colleges were strong on
training and weak on educating then they may have been short changed for the
long haul. For example, if an accounting, nursing, pharmacy, or engineering
degree program provides terrific technical training courses for graduates who
are lousy writers, terrible public speakers, and who learned almost nothing in
color book history, literature, mathematics, and language courses, then there
may indeed be a "big gap between real and perceived learning."

Students who scored much higher on their SAT/ACT tests in high school than
they did on their GRE or related graduate school admissions tests should
question the value of college to their "real learning."

Jensen Comment
One of the big problems with this environmental solution is that grass sucks in
the evil carbon dioxide and expels the clean oxygen we breathe. Could this
eventually come down to a fight between drinking and breathing?

Remember the good old days when it was evil corporations against Hollywood's
earth-saving greens?
In those days it was timber barrens pitted against tree
huggers saving
spotted owls.
Now it's dark greens against light greens!

Wind power's impact on wildlife has long been a
sticking point when it comes to the renewable resource's development. Ever
since the
Altamont, California turbines went up in the late
1970s, bird kills have been highlighted as the best reason to show some
restraint on massive wind farms. Nothing has changed today: most recently,
Minnesota-based utility Xcel Energy
canceled a contractto build a 150-megawatt wind
farm because of concerns over bird impacts.

The wind farm, which was to be built in
southeastern North Dakota byenXco Development Corp.,
would have cost about $400 million and was scheduled to be completed by the
end of this year. But two endangered species have scuttled the plan: the
whooping crane and the piping plover. Xcel would have had to spend time and
money attempting to mitigate any threats to the birds, and apparently those
requirements made the project too uncertain to move forward.

Bird groups and some other environmentalists have
focused heavily on the wind turbine impacts; a
recent American Bird Conservancyvideo showed a
vulture being struck by a turbine, and there are reportedly hundreds of
thousands of bird fatalities each year due to wind power. As Andy Revkin
points out at Dot Earth, though, this is actually a fairly low number
compared to other manmade structures. If
buildings kill hundreds of millions of
birds every year, stopping short on wind power entirely because of such
concerns might be the wrong move.

Still, Xcel's move to protect two species that are
down to only a few individuals in certain areas is commendable. Proper
siting and configuration of wind farms can obviously help with this issue as
well; the Altamont turbines were small and situated extremely close
together. Doing things carefully, in this case, will be better than not
doing them at all.

WIND farms are much less efficient than the
industry claims, according to new research. A report produced for the
conservation charity the John Muir Trust (JMT) says turbines are producing
below 10 per cent of capacity for more than a third of the time.

It claims that for extended periods, all the wind
turbines in Scotland linked to the National Grid produce less than 20MW of
energy - just enough power for 6,667 households to boil their kettles

Helen McDade, JMT's head of policy, said: "This
report is a real eye-opener for anyone who's been wondering how much power
Scotland is getting from the fleet of wind turbines that have taken over
many of our most beautiful hillsides. The answer appears to be, much less
than is routinely claimed."

The research was carried out by Caithness-based
Stuart Young Consulting, on electricity generated from UK wind farms between
November 2008 and December 2010.

The wind industry and government have regularly
said turbines will generate on average 30 per cent of their rate capacity
over a year.

The study concludes there is an urgent need to
re-evaluate the implications of reliance on wind for any significant
proportion of our energy requirement.

Scottish Renewables policy director Jenny Hogan
said it had no confidence in the figures.

"Yet again the John Muir Trust has commissioned an
anti-wind farm campaigner to produce a report about UK onshore wind energy
capacity output."

While insider trading cases have been attracting
much of the financial headlines, there is another issue that will have a
much greater impact on corporate bottom lines: bribery.

The British Ministry of Justice has announced
guidelines for the implementation of the far-reaching Bribery Act of 2010,
which goes into effect on July 1. Meanwhile, while the Securities and
Exchange Commission is set this month to announce rules required by the
Dodd-Frank Act to encourage whistleblowers to disclose information about
corporate misconduct, most likely including violations of the Foreign
Corrupt Practices Act.

The Bribery Act is sure to drive up the costs of
compliance programs for American companies doing business in Britain, while
the Dodd-Frank Act’s whistleblower provisions may well render those programs
superfluous, even though they will still be required by the Sarbanes-Oxley
Act.

The Foreign Corrupt Practices Act prohibits
individuals and companies from paying bribes to foreign officials to obtain
or retain business in the country. It also requires corporations that file
reports with the S.E.C. to maintain accurate books and records in accordance
with the accounting rules. The law, first adopted in 1977, has grown in
importance over the past decade as the Justice Department, working with the
S.E.C., has brought a number of cases against multinational companies for
corrupt payments, resulting in millions of dollars of fines and penalties.

Britain’s Bribery Act is broader in some respects
than the Foreign Corrupt Practices Act, most importantly applying to any
type of bribery, not just payments to foreign officials. The Bribery Act
makes a company liable for the actions of those “associated” with a
“commercial organization,” including any employee or agent who acts on its
behalf, and the organization is strictly liable for any failure to prevent
the bribery.

For American companies, a key facet of the Bribery
Act is its application to any organization that “carries on a business” in
Britain. The Ministry of Justice’s guidance is not particularly helpful on
the scope of the law, noting that it would not apply to foreign company that
did not have a “demonstrable business presence” in Britain, and that a
company is not necessarily liable if it lists its shares on a British
exchange or maintains a subsidiary in the country. Rather than explaining
what the law does cover, the guidance simply describes what might fall
outside the Bribery Act, while noting that the courts will finally decide
the issue. This provides little clarity about the scope of the law.

The Bribery Act provides a defense for a company
accused of a violation if it can show it had in place “adequate procedures”
to prevent an associated person from engaging in bribery, something the
Foreign Corrupt Practices Act does not recognize as a basis to avoid
liability. The Ministry of Justice outlined six principles for preventing
bribery that should guide companies in adopting or expanding a compliance
program to help establish a defense to a charge. The principles focus on
adequately assessing the risks of a violation and implementing a
sufficiently rigorous program of prevention and monitoring.

While almost every publicly traded American company
already has a compliance program in place, the potentially broad scope of
the Bribery Act is likely to require companies doing any substantial amount
of business in Britain to devote even greater resources to preventing
bribery of any type, not just that involving foreign officials. Compliance
is not cheap, of course, which means the lawyers, accountants and outside
consultants who specialize in this field will see an uptick in business.

I’m not going to hold my breath waiting for Porter
to give some evidence of contrition about his mission to Tripoli. Sir Howard
Davies may have resigned as director of the LSE (“The short point is that I am
responsible for the school’s reputation and that has suffered”), but being a
Harvard professor apparently means never having to say you’re sorry. Perhaps
instead the university will find some way to rein in on its professors’ more
self-serving ambitions.David Warsh, "A Recent Exercise in Nation-Building by Some Harvard
Boys," EconomicPrincipals.com, March 27, 2011 ---
http://www.economicprincipals.com/issues/2011.03.27/1248.html
Thank you Robert Walker for the heads up.

It was worth a smile at breakfast that morning in
February 2006, a scrap of social currency to take out into the world.
Michael Porter, the Harvard Business School management guru, had grown
famous offering competitive strategies to firms, regions, whole nations.
Earlier he had taken on the problems of inner cities, health care and
climate change. Now he was about to tackle perhaps the hardest problem of
all (that is, after the United States’ wars in Afghanistan and Iraq).

He had become adviser to Moammar Khadafy’s Libya.

There at the bottom of the front page of the
Financial Times was a
storythat no one else had that day, or any other
– a scoop. It turned out that Porter and his friend Daniel Yergin and the
consulting firms which they had respectively co-founded and founded, Monitor
Group and Cambridge Energy Research Associates, had been working for a year
on a plan to diversify the Libyan economy away from its heavy dependence on
oil. Their teams had conducted more than 2,000 interviews with “small- and
medium-scale entrepreneurs as well as Libyan and foreign business leaders.”
(Both men are better-known as celebrated authors: Porter for
Competitive Strategy: Techniques for Analyzing Industries and Competitors
and The Competitive Advantage of Nations, Yergin for The Prize: the
Epic Quest for Oil, Money and Power and The Commanding Heights: the
Battle for the World Economy.)

The next day Porter would present the 200-page
document they had prepared in a ceremony in Tripoli. Khadafy himself might
attend. The FT had seen a copy of the report, which envisaged a
glorious future under the consultants’ plan. If all went well, it said, then
by 2019 – the 50th anniversary of the military coup that brought Col.
Khadafy to power – Libya would have “one of the fastest rates of business
formation in the world,” making it a regional leader contributing to the
“wealth and stability of surrounding nations.”

. . .

We now know that Khadafy’s son bribed his way into
his PhD from the London School of Economics (LSE); that Monitor Group had
been paid to help him write his dissertation there (much of which apparently
turns out to have been
plagiarized, anyway); that the Libyan government
was paying Monitor $250,000 a month for its services; that, according to
The New York Times, Libya’s sovereign wealth fund today owns a portion
of Pearson PLC, the conglomerate that publishes the Financial Times
and The Economist; that the whole deal quietly fell apart two years
later.

Sir Howard Davies resigned earlier this month as
director of the LSE after it was disclosed he had accepted a ₤1.5 million
donation in 2009 from a charity controlled by Saif Khadafy.

It turns out that Monitor also proposed to write a
book boosting Khadafy as “one of the most recognizable individuals on the
planet,” promised to generate positive press, and to bring still more
prominent academics, policymakers and journalists to Libya, according to
Farah Stockman of The Boston Globe. She did a banner job of
pursuing the details she found in
A Proposal For Expanding the Dialogue Surrounding the Ideas of Moammar
Khadafy, a proposal from Mark Fuller in 2007 that
a Libyan opposition group posted on the Web.

Among those enlisted were Sir Anthony Giddens,
former director of the LSE; Francis Fukuyama, then of Johns Hopkins
University; Benjamin Barber, of Rutgers University (emeritus); Nicholas
Negroponte, founder of MIT’s Media Lab; Robert Putnam and Joseph Nye, both
former deans of Harvard’s Kennedy School of Government. Nye received a fee
and wrote a
broadly sympathetic accountof his three-hour
visit with Khadafy for The New Republic. He also told the Globe’s
Stockman he had commented on a chapter of Saif’s doctoral dissertation.
(When The New Republic scolded Nye earlier this month, after
Mother Jones magazine
disclosedthe fee, Nye replied that his original
manuscript implied that he had been employed as a consultant by Monitor, but
that the phrase had been edited out).

. . .

I’m not going to hold my breath waiting for Porter
to give some evidence of contrition about his mission to Tripoli. Sir Howard
Davies may have resigned as director of the LSE (“The short point is that I
am responsible for the school’s reputation and that has suffered”), but
being a Harvard professor apparently means never having to say you’re sorry.
Perhaps instead the university will find some way to rein in on its
professors’ more self-serving ambitions.

In the thick of tax season, most certified public
accountants are chained to their desks grinding out returns.

Doug Stives, a CPA from Red Bank, N.J., went skiing
in Utah.

"I always dreamed of coming here for peak
conditions," he said in mid-March between runs at Snowbasin Resort.

The trip is among the many perks that have accrued
from his decision, in 2006, to become, in effect, The Most Tax-Efficient Man
in America. The experiment has led to a new career, frequent travel and
obsessive documentation of expenses, such as a $6 hot dog he recently bought
in the Philadelphia airport.

The "aha" moment came to him, he says, after a
college approached him about a teaching gig and he realized he could put
into practice many of the tax strategies he had learned over the decades.

Step One was to change jobs. Mr. Stives had been a
partner for 36 years at The Curchin Group, an accounting firm. By accepting
an offer to teach tax and accounting courses full-time at the Leon Hess
Business School of Monmouth University in New Jersey, he was able to tap
into a broad array of tax-free employee benefits not available to him at the
firm.

Step Two was the formation of Doug Stives LLC, the
separate consulting business to which he attributes an impressive array of
expenses. In general, people who are employees and have side businesses are
often in the best position to maximize the tax code's benefits, say experts.
Mr. Stives calls this "the best of all worlds."

The result, says Mr. Stives, is that while he earns
less than 75% of his earlier pay, he takes home almost 90% as much. And he
says he reaps another $40,000 a year in tax-free benefits from his college
gig. Among other things, the school adds to his 401(k) contribution and
provides tax-free, discounted health plans for Mr. Stives and his wife, plus
disability insurance. As a partner in the accounting firm, he had to fund
such expenses himself.

Not that all is perfect now. One peeve: dealing
with what he calls "airline nonsense"—long lines, rising fees and canceled
flights. But overall, he says, "my quality of life is so much higher."

His wife of 40 years, Elizabeth Stives, agrees. "We
travel so much now for his business," she says. "Next is Lake Tahoe."

Continued in article

Jensen Comment
Tom is probably not the best person to ask about this since I don't think he
takes his wife on most of his many trips. However, back when I was consulting
and/or making presentations all over the U.S., Canada, Mexico, Europe, sometimes
New Zealand and Asia I typically took my wife along for our expense-paid and/or
tax-deductable holidays ---
http://www.trinity.edu/rjensen/Resume.htm#Presentations

I think I enjoyed these "holidays" more because they were tax deductible
or they earned me a profit after expenses. I don't recall many away-from
home adventures that were strictly out-of-pocket.

Our 141,000 people are part of a global network
that spans more than 140 countries, and working effectively in a global
marketplace is one of our key priorities. It helps foster our inclusive
culture, and promotes global assignments and working on cross-cultural
teams. That is why we offer a wide range of programs and experiences for our
interns, new hires and early-career professionals to build their global
mindsets.

The good news is that today’s college students are
the most global generation to date. Research among the attendees of the
Ernst & Young 2010 International Internship Conference shows that 88% have
traveled outside their home country and 36% have studied abroad. These
business leaders of tomorrow are hungry for international experience, and we
at Ernst & Young are passionate about providing the tools they need to
develop a global mindset.

We begin providing this training long before the
students are hired. Our upcoming
Emerging Leaders Summit, a pre-internship
conference for high-performing college sophomores and juniors, includes
workshops designed to build students’ global intellectual, psychological and
social capital, the building blocks of a successful global mindset.
Opportunities for international geographic mobility begin with overseas
assignments in the
Global Student Exchange Program, an exciting
opportunity for Ernst & Young interns. Internships start in the students’
home office locations, then four weeks abroad at another Ernst & Young
office. Participants then return and complete their internship back home.
Flights, housing and work visas costs are paid for by Ernst & Young. In
addition, Ernst & Young was the only ‘Big Four’ organization to hold an
International Intern Leadership Conference in both
2009 and 2010. Attended by nearly 1,400 students from over 13 countries last
year, the conference allows students to meet their intern counterparts from
around the world, an invaluable first step to creating their global
networks.

We are also very excited to announce a new
experience geared towards helping our younger employees on their journey
towards developing a global mindset. Our
Global Exchange Programhas been extended to offer
second and third-year employees short-term international rotations, allowing
more of our professionals to experience geographic mobility earlier in their
careers. Already enjoying several years of success in our Europe, Middle
East, India and Africa areas, the Americas pilot of this program will link
people in our more junior ranks from Brazil, Canada and the US so that they
can team internationally on select high-profile clients.

Jensen Comment
Stanford University's Graduate School of Business added a globalization program
with five new assistant professorships under the leadership of senior professor
Condoleezza Rice, PhD

Although Stanford's program is a multidisciplinary business globalization
education and research program, that's the nature of such programs in the spirit
of Dan Black's article above.

Also new programs on globalization fit nicely into the initiatives undertaken
by the new Pathways Commission formed in a joint program of the AAA and the
AICPA ---
http://commons.aaahq.org/files/ae7732e589/AEN_Fall10_PATHWAYS.pdf
Search under Bruce Behn for more detailed information about the Pathways
Commission, which Bruce now chairs.

As the violence spread, billions of dollars of
cartel cash began to seep into the global financial system. But a special
investigation by the Observer reveals how the increasingly frantic warnings
of one London whistleblower were ignored

On 10 April 2006, a DC-9 jet landed in the port
city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting.
Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7
tons of cocaine, valued at $100m. But something else – more important and
far-reaching – was discovered in the paper trail behind the purchase of the
plane by the Sinaloa narco-trafficking cartel.

During a 22-month investigation by agents from the
US Drug Enforcement Administration, the Internal Revenue Service and others,
it emerged that the cocaine smugglers had bought the plane with money they
had laundered through one of the biggest banks in the United States:
Wachovia, now part of the giant Wells Fargo.

The authorities uncovered billions of dollars in
wire transfers, traveller's cheques and cash shipments through Mexican
exchanges into Wachovia accounts. Wachovia was put under immediate
investigation for failing to maintain an effective anti-money laundering
programme. Of special significance was that the period concerned began in
2004, which coincided with the first escalation of violence along the
US-Mexico border that ignited the current drugs war.

Criminal proceedings were brought against Wachovia,
though not against any individual, but the case never came to court. In
March 2010, Wachovia settled the biggest action brought under the US bank
secrecy act, through the US district court in Miami. Now that the year's
"deferred prosecution" has expired, the bank is in effect in the clear. It
paid federal authorities $110m in forfeiture, for allowing transactions
later proved to be connected to drug smuggling, and incurred a $50m fine for
failing to monitor cash used to ship 22 tons of cocaine.

More shocking, and more important, the bank was
sanctioned for failing to apply the proper anti-laundering strictures to the
transfer of $378.4bn – a sum equivalent to one-third of Mexico's gross
national product – into dollar accounts from so-called casas de cambio (CDCs)
in Mexico, currency exchange houses with which the bank did business.

"Wachovia's blatant disregard for our banking laws
gave international cocaine cartels a virtual carte blanche to finance their
operations," said Jeffrey Sloman, the federal prosecutor. Yet the total fine
was less than 2% of the bank's $12.3bn profit for 2009. On 24 March 2010,
Wells Fargo stock traded at $30.86 – up 1% on the week of the court
settlement.

Importance of Internal Controls Even Among the "Good Folks"April 3, 2011 Message from Jim McKinney

On today’s NPR Program, This
American Life, there was an interesting story today about how a young
untrained person was put in-charge of The Kennedy Center gift shop and
learned the importance of internal controls. The shrinkage was in the 40%
range initially. The main point was, here are these basically good people
volunteering time, and yet many of them were stealing cash and merchandise
because there were no internal controls.

The American dream of owning a home with a white
picket fence may stay a dream for many, according to a recent study by a
Kansas State University economist.

Tracy Turner, associate professor of economics at
K-State, and Christian Hilber, a professor at the London School of Economics
in the United Kingdom, completed a study on America's mortgage interest
deduction and how effectively it promotes homeownership.

The mortgage interest deduction, also called the
MID, is the second largest tax break in the federal tax code and is meant to
promote homeownership by allowing itemizing homeowners to deduct the annual
interest payments they make on their primary residence and second home real
estate loans. For the 2011 fiscal year, the deduction will account for an
estimated $104.5 billion in revenue loss for the U.S. Treasury.

However, since the Reagan administration, the
deduction has been viewed as a vehicle for promoting homeownership, Turner
said.

"In urban places suffering from neighborhood
instability, underperforming schools, low social capital and poor
governance, increasing homeownership rates may improve conditions in these
communities. This is because when households own their housing, they have
more of a stake in the success of their communities," Turner said. "But in
these urban places the MID is doing the opposite; it's actually lowering the
likelihood of owning a home."

The duo's study analyzed household data collected
from 1984-2007 by the Panel Study of Income Dynamics.

Findings showed that the mortgage interest
deduction boosts homeownership rates only in areas with an abundant housing
supply, like the Midwest -- but only for higher-income households. In denser
urban cities with limited housing available, the deduction actually has a
negative impact, reducing homeownership and instead inflating housing
prices.

According to Turner, the finding is consistent with
economic theory: tight land restrictions mean that the higher demand for
owner-occupied housing – because of increases in the mortgage interest
deduction -- will only bid up house prices without expanding the house
stock, which in turn means higher down payments.

Consequently, though households may be able to make
monthly payments, low-wealth households can't afford the elevated down
payment. These high house prices, and therefore higher transaction costs,
also make homeownership a less attractive option to mobile households that
may not be looking for a long-term purchase.

Continued in article

Jensen Comment
Clearly the mortgage deduction issue gets confounded by other factors affecting
the motivation to buy a home in a given neighborhood. In a great location with
good schools, scenic views, ease of commuting, etc. one's investment in a home
is more apt to make a capital gain as well as provide fine living while owning
the home. In a rundown neighborhood with crime problems, poor schools, etc. an
investment in a home is more apt result in a capital loss. Why buy a home in a
neighborhood that you're trying to escape from as soon as you can afford better
and/or as soon as you have school-age children?

Hence the mortgage deduction motivation may not be as important as other
factors driving incentives to own rather than rent.

Making Home Affordable is a key part of the Obama
Administration's effort to help homeowners avoid foreclosure. If you are
struggling with your monthly mortgage payments or have already missed a
payment, now is the time to take action. Start today by learning more about
the options available to you through MHA

I think the title put on this by Huffington Post is
misleading. The "worth" of somebody in a profession must focus as
much or even more on the worth of the benefits of that person
vis-a-vis the cost. My wife had four (soon to be five) very
expensive surgeries from one of the outstanding spine surgeons in
the world. We can aggregate the cost of this Boston surgeon's
billings, but how in the world would we ever measure his benefit or
worth?
http://www.trinity.edu/rjensen/Erika2007.htm

Incidentally he's also one of the most important surgical residency
teachers in the shadows of the Harvard Medical School. Residents
seek him out because he's such a superb teacher. How do we
measure the value of his contributions to the future surgeries
performed by all the surgical residents who've worked closely with
this surgeon?

Similarly we can aggregate the cost of having Dennis Beresford for
14 years at the University of Georgia. But how in the world would we
ever measure his "worth?" How do we measure the value of his
contributions to all the accounting students who've worked closely
with this remarkable professor of accountancy?.

Of course we could also argue that the benefit of 23-year old Ms.
Kinder teaching kindergarten in South Chicago is invaluable. About
the only way we have of comparing a unique Harvard spine surgeon
with a kindergarten teacher is how much it takes to replace them
with professionals having comparable skills. I would argue that Ms.
Kinder can be replaced for a whole lot less money than my wife's
very uniquely qualified spine surgeon.

However, comparing their annual compensation is only a very, very
rough way to measure "worth" to society. Like you, I hesitate to
conclude that the "worth" of Stanley O'Neal was the $160 million it
took to get him out the door. Compensation is confounded by a whole
lot of factors other than societal "worth."
."Stanley O'Neal who is leaving Merrill
Lynch after giving it a big fat gift of a $8 billion dollar
write-off thanks to risky investments. The board just can't help but
feed this obesity epidemic. They're giving him $160 million plus in
severance for his troubles as he heads for the door. At some point,
the nation's corporations, or most pointedly, their corporate
boards, will realize throwing money at their CEOs is probably not
the best idea"
"Obesity Epidemic Among CEO Pay," The Huffington Post, November 1,
2007 ---
http://www.huffingtonpost.com/eve-tahmincioglu/obesity-epidemic-among-ce_b_70810.html

Related to this is the vexing issue of computing the cost of degrees
awarded such as an undergraduate degree in art history versus a PhD
in accountancy ---
Issues in Computing a College's Cost of Degrees Awarded ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#CostAccounting

Here are my earlier threads on the controversial Texas A&M costing
study that focused more on comparing the cost of degrees awarded
than the "worth" of Aggie professors like Ed Swanson.or Tom Omer.

Texas A&M Case on Computing the Cost of Professors and Academic Programs

Jensen Comment
In an advanced Cost/Managerial Accounting course this assignment could have two
parts. First assign the case below. Then assign student teams to write a case on
how to compute the cost of a given course, graduate in a given program, or a
comparison of a the cost of a distance education section versus an onsite
section of a given course taught by a tenured faculty member teaching three
courses in general as well as conducting research, performing internal service,
and performing external service in his/her discipline.

From The Wall Street Journal Accounting Weekly Review on November 5,
2010

SUMMARY: The article describes a contribution margin review at Texas A&M
University drilled all the way down to the faculty member level. Also
described are review systems in place in California, Indiana, Minnesota,
Michigan, Ohio and other locations.
CLASSROOM APPLICATION: Managerial concepts of efficiency, contribution
margin, cost management, and the managerial dashboard in university settings
are discussed in this article.

QUESTIONS:
1. (Introductory) Summarize the reporting on Texas A&M University's Academic
Financial Data Compilation. Would you describe this as putting a "price" on
professors or would you use some other wording? Explain.

2. (Introductory) What is the difference between operational efficiency and
"academic efficiency"?

3. (Advanced) Review the table entitled "Controversial Numbers: Cash Flow at
Texas A&M." Why do you think that Chemistry, History, and English
Departments are more likely to generate positive cash flows than are
Oceanography, Physics and Astronomy, and Aerospace Engineering?

4. (Introductory) What source of funding for academics is excluded from the
table review in answer to question 3 above? How do you think that funding
source might change the scenario shown in the table?

5. (Advanced) On what managerial accounting technique do you think
Minnesota's state college system has modeled its method of assessing
campuses' performance?

6. (Advanced) Refer to the related article. A large part of cost increases
in university education stem from dormitories, exercise facilities, and
other building amenities on campuses. What is your reaction to this parent's
statement that universities have "acquiesced to the kids' desire to go to
school at luxury resorts"?

Carol Johnson took the podium of a lecture hall one
recent morning to walk 79 students enrolled in an introductory biology
course through diffusion, osmosis and the phospholipid bilayer of cell
membranes.

A senior lecturer, Ms. Johnson has taught this
class for years. Only recently, though, have administrators sought to
quantify whether she is giving the taxpayers of Texas their money's worth.

A 265-page spreadsheet, released last month by the
chancellor of the Texas A&M University system, amounted to a profit-and-loss
statement for each faculty member, weighing annual salary against students
taught, tuition generated, and research grants obtained.

Ms. Johnson came out very much in the black; in the
period analyzed—fiscal year 2009—she netted the public university $279,617.
Some of her colleagues weren't nearly so profitable. Newly hired assistant
professor Charles Criscione, for instance, spent much of the year setting up
a lab to research parasite genetics and ended up $45,305 in the red.

The balance sheet sparked an immediate uproar from
faculty, who called it misleading, simplistic and crass—not to mention,
riddled with errors. But the move here comes amid a national drive, backed
by some on both the left and the right, to assess more rigorously what,
exactly, public universities are doing with their students—and their tax
dollars.

As budget pressures mount, legislators and
governors are increasingly demanding data proving that money given to
colleges is well spent. States spend about 11% of their general-fund budgets
subsidizing higher education. That totaled more than $78 billion in fiscal
year 2008, according to the National Association of State Budget Officers.

The movement is driven as well by dismal
educational statistics. Just over half of all freshmen entering four-year
public colleges will earn a degree from that institution within six years,
according to the U.S. Department of Education.

And among those with diplomas, just 31% could pass
the most recent national prose literacy test, given in 2003; that's down
from 40% a decade earlier, the department says.

"For years and years, universities got away with,
'Trust us—it'll be worth it,'" said F. King Alexander, president of
California State University at Long Beach.

But no more: "Every conversation we have with these
institutions now revolves around productivity," says Jason Bearce, associate
commissioner for higher education in Indiana. He tells administrators it's
not enough to find efficiencies in their operations; they must seek
"academic efficiency" as well, graduating more students more quickly and
with more demonstrable skills. The National Governors Association echoes
that mantra; it just formed a commission focused on improving productivity
in higher education.

This new emphasis has raised hackles in academia.
Some professors express deep concern that the focus on serving student
"customers" and delivering value to taxpayers will turn public colleges into
factories. They worry that it will upend the essential nature of a
university, where the Milton scholar who teaches a senior seminar to five
English majors is valued as much as the engineering professor who lands a
million-dollar research grant.

And they fear too much tinkering will destroy an
educational system that, despite its acknowledged flaws, remains the envy of
much of the world. "It's a reflection of a much more corporate model of
running a university, and it's getting away from the idea of the university
as public good," says John Curtis, research director for the American
Association of University Professors.

Efforts to remake higher education generally fall
into two categories. In some states, including Ohio and Indiana, public
officials have ordered a new approach to funding, based not on how many
students enroll but on what they accomplish.

Continued in article

Jensen Comment
This case is one of the most difficult cases that managerial and cost
accountants will ever face. It deals with ugly problems where joint and indirect
costs are mind-boggling. For example, when producing mathematics graduates in
undergraduate and graduate programs, the mathematics department plays an even
bigger role in providing mathematics courses for other majors and minors on
campus. Furthermore, the mathematics faculty provides resources for internal
service to administration, external service to the mathematics profession and
the community, applied research, basic research, and on and on and on. Faculty
resources thus become joint product resources.

Furthermore costing faculty time is not exactly the same as costing the time
of a worker that adds a bumper to each car in an assembly line. While at home in
bed going to sleep or awakening in bed a mathematics professor might hit upon a
Eureka moment where time spent is more valuable than the whole previous lifetime
of that professor spent in working on campus. How do to factor in hours spent
in bed in CVP analysis and Cost-Benefit analysis? Work sampling and
time-motion studies used in factory systems just will not work well in academic
systems.

In Cost-Profit-Volume analysis the multi-product CPV model is
incomprehensible without making a totally unrealistic assumption that "sales
mix" parameters are constant for changing levels of volume. Without this
assumption for many "products" the solution to the CPV model blows our minds.

Another really complicating factor in CVP and C-B analysis are semi-fixed
costs that are constant over a certain time frame (such as a semester or a year
for adjunct employees) but variable over a longer horizon. Of course over
a very long horizon all fixed costs become variable, but this generally destroys
the benefit of a CVP analysis in the first place. One problem is that faculty
come in non-tenured adjunct, non-tenured tenure-track, and tenured varieties.

I could go on and on about why I would never attempt to do CVP or C-B
research for one of the largest universities of the world. But somebody at
Texas A&M has rushed in where angels fear to tread.

College tuition
prices keep rising. State budgets are stagnant or shrinking. And
policy makers, from President Obama on down, are increasingly
calling for increases in the number of Americans who get some higher
education or training.

Those factors have
led more state legislators, trustees and others to argue that, to
accomplish the latter goal given the former circumstances, colleges
are going to have to lower what they spend to produce the average
credential they award. But any discussion of lowering the "cost per
degree" must start with a more fundamental question: What does a
degree cost to produce now?

That question
may be basic, but it is not simple, as
a new reportfrom the Delta Project on
Postsecondary Education Costs, Productivity, and Accountability
makes clear. The paper, prepared by Nate Johnson, associate director
of institutional planning and research at the University of Florida,
lays out a range of possible approaches to calculating the cost of a
college degree and then calculates them using a rich set of data
from the State University System of Florida, where Johnson formerly
worked.

The paper shows that
it is distinctly possible to come up with such a figure, but the
wide variation in the numbers -- based on institution type, program,
degree level, and other factors -- suggests that the answer will
depend in large part on how the question is framed. And that
decision is a surprisingly value-laden one, says Johnson. "You frame
the question one way if you are only interested in students who
graduate, and another way if you want to know the cost for people
who go to college and don't complete," he says. "The point is, this
is not just a data question. It's a question of what it is that we
want from our colleges and universities."

The broad work of
the Delta Project and its founder, Jane Wellman, is to analyze the
"spending side" of the higher education cost and price picture; the
group has released a series of reports that try to document the
interplay of colleges' revenues and expenditures, and how those
trends affect what they charge to students. The new study, which
grew out of Johnson's work in Florida, he says, aims to develop a
"common language," if not a common format, for focusing the
discussion about how one might measure the cost of a degree in a
particular institution, system or state. Toward that end, Johnson
proposes several possible ways of calculating the average cost of a
degree.

The analyses are
based on data showing that the Florida university system incurred an
average of $288 in direct and indirect instructional expenditures
per credit hour, with wide variation by level ($188 for lower
division undergraduate, $537 for master's, etc.), institution ($240
for an upper level undergraduate credit at the massive University of
Central Florida, $677 for the same credit at the 700-student New
College), and field of study ($159 in family/consumer sciences, $509
for natural resources/conservation). The analysis counts only those
expenditures derived from state appropriations and student tuition,
excluding endowment and other funds.

The first estimate,
which Johnson calls the "catalog cost," calculates what a college
would spend to educate a student who fulfills the "catalog
requirements" of the average degree to the letter -- no more, no
less. (The equation: cost per credit hour x instructional
expenditures/credit hours.) The average cost is $26,485, with
institutions within the Florida system ranging from $22,440 to
nearly double that. Johnson also found significant variation by
field because of vastly different requirements and program length,
with mechanical engineering averaging $37,870 vs. $27,159 for
elementary education.

The catalog method
is easily understood, but it "does not reflect actual student
behavior," Johnson notes. More accurate in gauging how students
actually maneuver through institutions, he writes, is the
"transcript method" of cost analysis, in which the total number of
credit hours students take are multiplied by the cost per credit
hour, and then divided by the number of degrees awarded. The average
freshman who entered a Florida system university and graduated in
2003-4 "attempted" 131 credits, including failed or withdrawn
courses and subtracting for any AP or dual enrollment courses that
reduced their course requirements.

The average
"transcript cost," then, was $31,763; converting to 2006 dollars, to
make parallel to the figures from the "catalog cost" analysis,
Johnson writes, the average figure is $33,672. (The 2003-4 figure
for mechanical engineering was $47,257.)

Both the catalog and
transcript cost methods factor into the calculation only those costs
incurred by students who actually graduate. The third major
analysis, "full cost attribution," examines the entire amount that
an institution or system spent on instructional purposes to achieve
an "aggregate level of degree completion." The equation looks like
this: all credits taken at an institution over three years x the
three-year average cost per credit hour/three years of degrees.

Not surprisingly,
because all courses taken by all students would be allocated to the
smaller proportion who actually earned degrees, this produces the
highest cost per degree number; $37,757 in 2002-3 dollars,
equivalent to $40,645 in 2005-6, Johnson writes. This analysis grows
less predictable and valid the more narrowly it is drawn, he adds,
because programs with high attrition, or into which many students
transfer late in the game, can have their figures drastically
altered. The overall high and low for the Florida university system,
for example, were $170,831 for "multidisciplinary studies" and
$21,473 for parks and recreation, and the variation by degree level
was enormous: $33,425 for a law degree, $259,781 for an M.D., and
$121,725 for a doctorate.

So which is the most
accurate assessment of what a university spends to educate a
graduate? The catalog cost of $26,485, the transcript cost of
$33,672, or the "full cost" $40,645? The last is "probably closer to
an answer" to the question that policy makers are increasingly
asking now, about "what would we have to spend to get more
graduates," though that assumes that colleges maintained their
current enrollment and expenditure levels, he notes.

But the other key
point, Johnson says, is that the choice of how you measure cost
depends, to an extent, on how you perceive the role of colleges.
Using the "full cost" measure, he asserts, more or less says that
most of what a university does is designed to educate students, and
that "all of those costs could be attributed to the cost of
producing college graduates," as overhead, he says.

"If you highly value
research or public service," though, "you could almost say that the
graduates are free -- a byproduct" of what you spend on those other
purposes.

While universities routinely
maintain that it costs them more to educate students than what students pay,
a new report says exactly the opposite is true.

The report was released today by the Center for
College Affordability and Productivity, which is directed by Richard K.
Vedder, an economist who is also an adjunct scholar at the American
Enterprise Institute and a Chronicle
blogger. It says student tuition payments
actually subsidize university spending on things that are unrelated to
classroom instruction, like research, and that universities unfairly inflate
the stated cost of providing an education by counting unrelated spending
into the mix of what it costs them to educate students.

"The authors find that many colleges and
universities are paid more to provide an education than they spend providing
one," says a news release on the
report, "Who Subsidizes Whom?"

The report's authors used
data from the U.S. Education Department's Integrated Postsecondary Education
Data System, or Ipeds, to conclude that more than half of students attend
institutions that take in more per student in tuition payments than what it
actually costs them to deliver an education.

The chief reason
universities inflate the figures on what they spend to educate students,
says the report, is that institutions include all of their spending—whether
it is directly related to instruction or not—when calculating what it costs
them to provide an education. In reality, says the report, depending on the
type of institution, it can cost universities much less to educate students
than what the institutions bring in through tuition charges.

"This study finds that
education and related spending is only a portion of many institutions'
budgets," says a news release on the study, "and that many schools spend
large amounts on things unrelated to educating students."

The report uses Dartmouth
College as a poster child to illustrate the gap between the actual costs of
providing an education and what an institution says it spends. On its Web
site, the report says, the Dartmouth College Fund maintained that while the
institution charged undergraduates about $50,000 each in academic 2009-10,
the college actually spent about $104,400 per student. While the center's
report notes that Dartmouth indeed spent more over all per student than what
it took in through tuition payments, "this does not mean that students are
being subsidized because not all of that spending is used toward
specifically educational purposes."

For example, says the
report, Dartmouth said it spent $37,000 per student on "academic support,"
$24,000 per student for research, $15,000 for "institutional support," and
$12,000 for "student services." But, says the report, "very little of that
$88,000 is properly attributed to the cost of providing an education."

A spokesman for Dartmouth
said it is legitimate for institutions to count research expenditures as
part of instruction. Dartmouth faculty members are "renowned as
teacher-scholars who involve their students in their scholarship," said the
spokesman. "Discovery of knowledge is a key part of Dartmouth’s fundamental
mission and a liberal-arts education."

The report criticizes colleges for stating that
they subsidize their students' education, saying "conventional wisdom is
often wrong" in that regard.

Remember the Roaring 1990s, the Tech Bubble, that burst for all those startup
companies and their IPOs that splattered on the walls
Remember the Roaring 1990s, the Tech Bubble, when computer science graduates
were getting signing bonuses and million-dollar stock option deals
Remember the Roaring 1990s, the Tech Bubble, when investors and bank lenders
lost billions at the end of the 20th Century when the bubble burst

Some analysts argue that the next Tech Bubble is growing larger and larger
and larger

At the above site on April 1, 2011 I received the following message which I
don't think is an April Fools joke:

Unfortunately, Google has deprecated the use of the
Google SOAP Search API which this tool uses. We are hoping to
update the code to use a different solution in the future. Thank
you for your patience.

The State
University of New York Upstate
Medical University is investigating
allegations that some fourth-year
students cheated in a
medical-literature course,reportsThe
Post-Standard, in Syracuse. The
students, who are scheduled to
graduate in May, could be expelled,
or face lesser punishment, if the
charges are true, said the dean,
Steven Scheinman. One student told
school officials that some students
in the course had collaborated in
taking online tests, which is not
permitted.

The Apollo Group on Tuesday
announceda quarterly loss and enrollment declines
at the University of Phoenix that were largely attributable to changes in
the for-profit institution's policies aimed at ensuring that more of the
students it enrolls can succeed academically. The company's announcement of
its second quarter results drove down its stock price,
Bloomberg reported. Apollo saw enrollment of new
students in University of Phoenix degree programs fall by 45 percent from a
year ago, and said its policy of requiring new students with few academic
credits to enroll in a free orientation program to see if they are cut out
for college-level work had suppressed enrollments in the short term but put
it "on a path of more consistently delivering high quality growth" in the
future. Phoenix, as the biggest and most visible player in the for-profit
higher education sector, has been under intense scrutiny amid discussion of
increased federal regulation, and it has put in place a series of changes
(including changing how it compensates recruiters),
its officials have said, to try to lead the
industry in a new direction.

Chuck's email tagline reads: "Notice: It's OK to
print this email. Paper is a biodegradable, renewable, sustainable product
made from trees. Growing and harvesting trees provides jobs for millions of
Americans. Working forests are good for the environment and provide clean
air and water, wildlife habitat and carbon storage. Thanks to improved
forest management, we have more trees in America today than we had 100 years
ago."

Now, understand that we don't advocate wanton waste
of paper or any other material, but avoiding the print option does
absolutely nothing to save the planet or forests. More forests are dying of
insect infestation and disease or being paved over across this country right
now than could be converted to an email print-out in a thousand years.

Paper is good. Around 105 A.D., man discovered that
paper traveled and transcribed better than stone; it became the renewable
medium of choice. Frankly, the human eye can only stare at a computer screen
for so long.

We appreciate and applaud people who are sensitive
to environmental issues. We both love forests and are avid
environmentalists. But we are going to continue to print out those necessary
emails without guilt.

Jensen Comment
The paper companies are the largest single landowners in Maine, New Hampshire,
and Vermont --- owning millions of acres of mostly conifer forests used for
making paper pulp. I view paper manufacturing as good for the environment since
bad types of forest removal is typically forestalled as long as the paper
companies can harvest and replant the timber.

Think of the air we breathe. Much of the oxygen in that air was generated by
our forests. Then think of how we are depleting the oxygen when we ravage our
forests.

Sadly the last paper mill in New Hampshire closed its doors as the world
transitions to electronic books, eReader newspapers, and PDF legal documents
stored only in hard drives. Some efforts are being made to revive the paper mill
in
Gorham, but similar closings have taken place in other paper mills around
the world.

My wife actually had tears in her eyes when she informed me this year that JC
Penney (pronounced Zjjock Penaaayyy) was dropping its big catalog. She still has
a bit of a stub left on the finger she uses to dial 1-800.

We might naively hope that these vast forests will be replanted with
beautiful hardwood trees for fine furniture, but the fact of the matter is that
hardwood trees are too slow growing to be a profitable replacement of the fir,
pine, and spruce forests used in paper making. Meanwhile the rain forests in the
tropics are being ravaged for hardwood furniture.

Softwood trees can be replanted for home building, but new and better
materials are replacing much of the wood in home building, especially materials
that are more fire and termite resistant.

Hence, I encourage printing computer documents since this helps to save the
forests that transform our harmful carbon dioxide into wonderful oxygen in a
photosynthesis process that went on for millions of years before animal forms of
life commenced on this beautiful planet.

Fortunately, there's not been technology to replace the paper tissue rolls
beside our commodes even if the commode sitters are now holding Kindles and
iPads while they do their bathroom business. Fortunately we've not yet
completely wiped out the paper industry that still provides much of the oxygen
we breathe.

Contrary to folklore, Iowa farmers did not use corn cobs in their outhouses.
I'm not lying when I say that on our family farm we tore out pages of Sears
Catalogs stored in the outhouse. People don't believe me these days when I tell
them we did not use toilet paper on the farm, but I'm telling truth about this
part of my childhood. I mentioned to you before that, as a young boy, I tore out
the women's underwear pages and hid them in the hay loft of the barn. This was
long before there were such things as Playboy Magazines. I guess
Hugh Hefner
doesn't get enough credit for his part in providing the air we breathe.

General Electric, the nation’s largest corporation,
had a very good year in 2010.

The company reported worldwide profits of $14.2
billion, and said $5.1 billion of the total came from its operations in the
United States.

Its American tax bill? None. In fact, G.E. claimed
a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of
American business owners and households now preparing their own returns, but
low taxes are nothing new for G.E. The company has been cutting the
percentage of its American profits paid to the Internal Revenue Service for
years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive
strategy that mixes fierce lobbying for tax breaks and innovative accounting
that enables it to concentrate its profits offshore. G.E.’s giant tax
department, led by a bow-tied former Treasury official named John Samuels,
is often referred to as the world’s best tax law firm. Indeed, the company’s
slogan “Imagination at Work” fits this department well. The team includes
former officials not just from the Treasury, but also from the I.R.S. and
virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled
at reducing its tax burden, many other companies have become better at this
as well. Although the top corporate tax rate in the United States is 35
percent, one of the highest in the world, companies have been increasingly
using a maze of shelters, tax credits and subsidies to pay far less.

In a regulatory filing just a week before the
Japanese disaster put a spotlight on the company’s nuclear reactor business,
G.E. reported that its tax burden was 7.4 percent of its American profits,
about a third of the average reported by other American multinationals. Even
those figures are overstated, because they include taxes that will be paid
only if the company brings its overseas profits back to the United States.
With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws
that encouraged some businesses and professionals to file as individuals,
have pushed down the corporate share of the nation’s tax receipts — from 30
percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high
it hobbles them in competing with foreign rivals. Even as the government
faces a mounting budget deficit, the talk in Washington is about lower
rates. President Obama has said he is considering an overhaul of the
corporate tax system, with an eye to lowering the top rate, ending some tax
subsidies and loopholes and generating the same amount of revenue. He has
designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the
business community and as the chairman of the President’s Council on Jobs
and Competitiveness, and it is expected to discuss corporate taxes.

“He understands what it takes for America to
compete in the global economy,” Mr. Obama said of Mr. Immelt, on his
appointment in January, after touring a G.E. factory in upstate New York
that makes turbines and generators for sale around the world.

A review of company filings and Congressional
records shows that one of the most striking advantages of General Electric
is its ability to lobby for, win and take advantage of tax breaks.

Over the last decade, G.E. has spent tens of
millions of dollars to push for changes in tax law, from more generous
depreciation schedules on jet engines to “green energy” credits for its wind
turbines. But the most lucrative of these measures allows G.E. to operate a
vast leasing and lending business abroad with profits that face little
foreign taxes and no American taxes as long as the money remains overseas.

Company officials say that these measures are
necessary for G.E. to compete against global rivals and that they are acting
as responsible citizens. “G.E. is committed to acting with integrity in
relation to our tax obligations,” said Anne Eisele, a spokeswoman. “We are
committed to complying with tax rules and paying all legally obliged taxes.
At the same time, we have a responsibility to our shareholders to legally
minimize our costs.”

The assortment of tax breaks G.E. has won in
Washington has provided a significant short-term gain for the company’s
executives and shareholders. While the financial crisis led G.E. to post a
loss in the United States in 2009, regulatory filings show that in the last
five years, G.E. has accumulated $26 billion in American profits, and
received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts
to corporate welfare, allowing G.E. not just to avoid taxes on profitable
overseas lending but also to amass tax credits and write-offs that can be
used to reduce taxes on billions of dollars of profit from domestic
manufacturing. They say that the assertive tax avoidance of multinationals
like G.E. not only shortchanges the Treasury, but also harms the economy by
discouraging investment and hiring in the United States.

So it’s not surprising that GE uses their auditor, KPMG, to help them
put their “zero” tax return together.

The Sarbanes-Oxley Act of 2002 started out tough
on tax. The rules regarding prohibited
activities by the auditor, intended to preserve
their independence, scared the living
daylights out of the largest firms. It appeared initially that the SEC
would prohibit the tax side of the firms from providing highly lucrative
tax advice to their audit clients. Many of those professionals started
planning an exit from their firms so they could continue working with
long time clients.

A compromise was reach

ed.The
resultis one of the
loosest and most generous exceptions to auditor independence rules on
the books.

In pressing forward,
the regulators are being entrusted with forecasting, and presumably
preventing, all undesirable repercussions that might happen to a
market when its regulatory conditions are importantly altered. No
one has such skills. Regulators were caught “flat-footed” by a
breakdown we had erroneously thought was more than adequately
reserved against.

In other words, the fact
that he completely failed to do his job — and in the process brought on
a financial crisis whose effects are still felt — is ample evidence that
it is futile to try to do the job at all.

He goes on:

The problem is
that regulators, and for that matter everyone else, can never get
more than a glimpse at the internal workings of the simplest of
modern financial systems. Today’s competitive markets, whether we
seek to recognise it or not, are driven by an international version
of Adam Smith’s “invisible hand” that is unredeemably opaque. With
notably rare exceptions (2008, for example), the global “invisible
hand” has created relatively stable exchange rates, interest rates,
prices and wage rates.

I really like that part
about “notably rare exceptions.” It reminds me of a defense lawyer
arguing that while his client may have committed a few murders on one
particular day, his conduct on all the other days of his life had been
exemplary.

Invoking Romeo and Juliet's Mercutio seems like the
most natural response to Microsoft's complaint to the European Commission
over Google's allegedly anticompetitive behavior—a plague on the houses of
Gates-Ballmer and Page-Brin would be well deserved. Even Brad Smith,
Microsoft's long-time general counsel, was compelled to call attention to
the "irony"—his word—of Microsoft's calling in the Commission to investigate
the search giant.

Microsoft, after all, suffered more than perhaps
any other at the hands of Brussels's antitrust cops, and the company knows
full well how difficult it is to run a business in the fast-moving tech
space with regulators rummaging through your virtual file cabinets for
evidence of ill-intent.

Not that Google is above playing
pin-the-regulator-on-the-rival, either. It milked the net neutrality crusade
for as long as it was useful in keeping Internet service providers at bay.
And four years ago Google filed a brief in court arguing that Microsoft's
Vista operating system violated the Redmond, Washington company's consent
decree stemming from the Justice Department's interminable case against the
software maker.

It's hard to believe now, but Microsoft's decade of
Brussels purgatory began with a complaint that Microsoft's Media Player was
illegally bundled with the Windows operating system. The European Commission
made the world safe for competition again by ordering Microsoft to sell a
version of Windows in Europe without a media player. This all seemed very
important to the antitrust gnomes at the time, which goes to show why
bureaucrats shouldn't design software. In the midst of that brouhaha, iTunes
came along and made all that huffing about "lock-in" and "network effects"
look like the self-serving rationalization of the antitrust guild that some
of us said it was at the time.

Now it's Microsoft's turn, and its complaint shows
that it has also learned to speak regulator-ese. According to Mr. Smith,
Google's sins include: denying competitors the ability to index YouTube's
cache of laughing-baby videos (although a nonscientific sampling of
Microsoft's Bing search results suggests that Microsoft has nevertheless
indexed some pretty obscure YouTube clips); restricting advertisers' ability
to copy their search campaigns to competitors' sites; and locking in large
European websites to the exclusive use of Google search boxes.

Continued in article

Questions
What's a financial long bet and how does it win or lose?
What's the distinction between a long bet speculation versus hedge?

From The Wall Street Journal Accounting Weekly Review on April 1, 2011

SUMMARY: The catastrophe in Japan has placed renewed focus on the country's
already fragile economy-and brought unexpected profits to investors who have
long bet that the nation eventually will be dragged down by its debt
problems.

DISCUSSION:

What is a hedge fund? How is a hedge fund different from mutual
funds or individual investing? What type of investor would invest in
such funds? What are the risk levels involved with investing in hedge
funds?

How did these hedge funds 'bet against Japan'? Why did some
investors think it wise to invest this way? How has the earthquake in
Japan impacted this type of investment?

What were the issues facing Japan before the earthquake? How has the
earthquake changed the situation? What is the long-term outlook for
business in the country? What are Japan's borrowing levels? How would
this impact investment in the country by businesses? By individuals?

The catastrophe in Japan has placed renewed focus
on the country's already fragile economy—and brought unexpected profits to
investors who have long bet that the nation eventually will be dragged down
by its debt problems.

In recent years, a chorus of voices has warned that
Japan is facing an inevitable crisis to be brought on by a stagnant economy,
a shrinking population and the worst debt profile of any major
industrialized country.

Hedge-fund managers from Kyle Bass of Hayman
Advisors LP in Dallas to smaller firms like Commonwealth Opportunity Capital
have made money since the earthquake on long-held bets on Japan's government
and corporate bonds.

Though the economic toll of the earthquake is far
from clear, the immediate response in the financial markets has been a
decline in stock prices, with the Nikkei Stock Average down 7.8% in two days
(including Friday, when the quake hit near the end of the trading day). The
price for insuring against a default by Japan on its government debt, a
popular way to position for a financial crisis in Japan, has jumped. But in
a move that runs counter to the expectations of some long-term Japan bears,
the yen has strengthened on expectations that Japanese investors and
corporations will be buying yen as they bring money home in coming weeks and
months.

The price for insuring $10 million of Japanese
sovereign debt for five years in the credit-default-swap market soared to
$103,000 on Monday, from $79,000 on Friday, according to data provider
Markit.

Reflecting the skepticism about Japan's outlook,
even before the disaster, the net notional amount of Japanese debt being
insured in the swaps market had surged to $7.4 billion from $4.1 billion a
year ago, according to data from the Depository Trust & Clearing Corp.
through March 4. The number of contracts outstanding has more than doubled.

Fresh DTCC data are due on Tuesday and will include
only the early effects of the earthquake.

Credit-default swaps of many corporate bonds have
become even more valuable, rewarding those that bet on them. Among the
biggest moves was in Tokyo Electric Power Co., owner of the nuclear-power
plants crippled by the earthquake.

Commonwealth Opportunity Capital, a $90 million
hedge fund in Los Angeles, made a profit of several million dollars on Tokyo
Electric on Monday, from an investment of less than $200,000. The annual
cost of protecting $10 million of Tokyo Electric's debt jumped to $240,000
on Monday from $40,700 on Friday.

"Nobody wants bad things to happen to people," said
Adam Fisher, who helps run Commonwealth Opportunity Capital. He said the
firm has been betting against Japanese corporate bonds for two years. "But
it shows how fragile that heavily levered nation is; there's very little
margin for error."

Betting against Japan has been a losing proposition
for many investors for years. Despite all the debt problems, bond prices
have continued to move higher partly because deflation, not inflation, has
been the concern. Also, domestic investors own most of the government's debt
and have been reluctant to sell.

But now, facing at least a short-term hit to the
economy from the earthquake and the likely need to issue more debt to pay
for reconstruction efforts, Japan is seeing its problems magnified.

"Japan's choices are very, very bad," said John
Mauldin, president of Millennium Wave Advisors. "Japan has an aging
population, which is saving less, their savings rate will go negative
sometime in the next few years at which point they will have to
significantly reduce their spending, increase taxes or print money or some
combination of the three.

"In the grand scheme of things, does the earthquake
technically move it up further? Yes, but they were already well down the
path."

Continued in article

Jensen Comment
Note how long positions on national debt are often a losing proposition unless
they are hedges. In hedging situations these gains and losses are offset by
gains and losses on the hedged items to the extent that the hedging contracts
are effective. For example, a hedge fund might invest in U.S. Treasury bonds
paying a fixed rate. There is no cash flow risk on interest payments or
repayment of the face value of the bonds. However, there is value risk since the
price of these outstanding bonds in the financial markets goes up and down
daily. The hedge fund can lock in fixed value by entering into a fair value
hedge such as by entering into a plain vanilla interest rate swap in which the
fixed-amount interest payments are swapped for variable rate payments. The value
of the bonds plus the value of the swap is thereby locked into a fixed value for
which there is no value risk. However, when hedging value risk the investor has
inevitably taken on cash flow risk. It's impossible to hedge both fair value
risk and cash flow risk. Investors must choose between one or the other.

Hedging against debt default entire is an extreme form of fair value hedging
and is usually done with a different type of hedging contract. Here the investor
is not so much concerned with interim interest payments (or interim changes in
value due to shifts in market interest rates) as he/she is concerned with
possible default on payback of the entire principal of the debt. In other words
it's more like insurance against a creditor declaring bankruptcy to get out of
repayment of all or a great portion of debt repayment.

A credit default swap (CDS) can almost be thought
of as a form of insurance. If a borrower of money does not repay her loan,
she "defaults." If a lender has purchased a CDS on that loan from an
insurance company, the lender can then use the default as a credit to swap
it in exchange for a repayment from an insurance company. However, one does
not need to be the lender to profit from this situation. Anyone (usually
called a
speculator) can purchase a CDS. If a borrower does
not repay his loan on time and defaults not only does the lender get paid by
the insurance company, but the speculator gets paid as well. It is in the
lender's best interest that he gets his money back, either from the
borrower, or from the insurance company if the borrower is unable to pay
back his loan. However, it is in the speculator's best interest that the
borrower never repay his loan and default because that is the only way that
the speculator can then take that default, turn it into a credit, and swap
it for a cash payment from an insurance company.

A more technical way of looking at it is that a
credit default swap (CDS) is a
swap contract and agreement in which the
protection buyer of the CDS makes a series of payments (often referred to as
the CDS "fee" or "spread") to the protection seller and, in exchange,
receives a payoff if a credit instrument (typically a
bond or loan) experiences a credit
event. It is a form of
reverse trading.

A credit default swap is a bilateral contract
between the buyer and seller of protection. The CDS will refer to a
"reference entity" or "reference obligor", usually a corporation or
government. The reference entity is not a party to the contract. The
protection buyer makes quarterly premium payments—the "spread"—to the
protection seller. If the reference entity defaults, the protection seller
pays the buyer the par valueof the bond in exchange for physical delivery of the
bond, although settlement may also be by cash or auction.A default is referred to as a "credit
event" and includes such events as failure to pay,
restructuring and bankruptcy.[2]
Most CDSs are in the $10–$20 million range with maturities between one and
10 years.

A holder of a bond may “buy protection” to hedge
its risk of default. In this way, a CDS is similar to credit insurance,
although CDS are not similar to or subject to regulations governing casualty
or life insurance. Also, investors can buy and sell protection without
owning any debt of the reference entity. These “naked credit default swaps”
allow traders to speculate on debt issues and the creditworthiness of
reference entities. Credit default swaps can be used to create synthetic
long and short positions in the reference entity.Naked CDS constitute most of the market inCDS.In addition, credit default swaps can
also be used in capital structure arbitrage.

Credit default swaps have existed since the early
1990s, but the market increased tremendously starting in 2003. By the end of
2007, the outstanding amount was $62.2 trillion, falling to $38.6 trillion
by the end of 2008.

Most CDSs are documented using standard forms
promulgated by the
International Swaps and Derivatives Association (ISDA),
although some are tailored to meet specific needs.
Credit default swaps have many variations.[2]
In addition to the basic, single-name swaps, there are basket default swaps
(BDS), index CDS, funded CDS (also called a credit linked notes), as well as
loan only credit default swaps (LCDS). In addition to corporations or
governments, the reference entity can include a special purpose vehicle
issuing
asset backed securities.

Credit default swaps are not traded on an exchange
and there is no required reporting of transactions to a government agency.During the
2007-2010 financial crisisthe lack of
transparency became a concern to regulators, as was the trillion dollar size
of the market, which could pose a
systemic riskto the economy.In March 2010, the DTCC Trade
Information Warehouse (see
Sources of Market Data) announced it would
voluntarily give regulators greater access to its credit default swaps
database

Credit Default Swap (CDS)
This is an insurance policy that essentially "guarantees" that if a CDO goes bad
due to having turds mixed in chocolates in a diversified portfolio, the
"counterparty" who purchased the CDO will recover the value fraudulently
invested in turds. On September 30, 2008 Gretchen Morgenson of The New York
Times aptly explained that the huge CDO underwriter of CDOs was the
insurance firm called AIG. She also explained that the first $85 billion given
in bailout money by Hank Paulson to AIG was to pay the counterparties to CDS
swaps. She also explained that, unlike its casualty insurance operations, AIG
had no capital reserves for paying the counterparties for the the turds they
purchased from Wall Street investment banks.

What Ms. Morgenson failed to explain, when Paulson eventually gave over $100
billion for AIG's obligations to counterparties in CDS contracts, was who were
the counterparties who received those bailout funds. It turns out that most of
them were wealthy Arabs and some Asians who we were getting bailed out while
Paulson was telling shareholders of WaMu, Lehman Brothers, and Merrill Lynch to
eat their turds.

Jensen Comment
Although this article focuses upon humanities doctoral graduates who were forced
to give up hope of starting out in tenure track positions at prestigious
research universities, this article repeats things that I've heard and learned
about accounting hires at major research universities that did not make tenure
and/or otherwise went to colleges that had heavier teaching loads and lower
research/publication expectations.

The article stresses the mind set changes that are necessary. Some faculty
are glad they are at colleges more focused on teaching whereas others never
quite overcome their frustrations. Much depends upon the attitude going into
more teaching and less research.

The findings from the 1970s do not entirely extrapolate to the 21st Century.
In the 1970s, most graduates from humanities doctoral programs could land tenure
track positions in respected colleges that were not prestigious research
universities. In the 21st Century, the majority of humanities doctoral graduates
cannot find similar tenure track positions. Those that do get tenure track
positions probably have greater job appreciation.

Thanks to a reader for pointing me to this recent paper by Heckman and
collaborators, which makes use of data from the Terman study of
gifted individuals (minimum IQ of 135 on the Stanford-Binet).

Of the personality factors, Conscientiousness and Extraversion had the largest
(positive) effect on lifetime earnings -- see figures below. See here for more
on Big 5 personality factors and a link to a personality test.

This paper estimates the internal rate of return (IRR)
to education for men and women of the Terman sample, a 70-year long prospective
cohort study of high-ability individuals. The Terman data is unique in that it
not only provides full working-life earnings histories of the participants, but
it also includes detailed profiles of each subject, including IQ and measures of
latent personality traits. Having information on latent personality traits is
significant as it allows us to measure the importance of personality on
educational attainment and lifetime earnings.

Our analysis addresses two problems of the literature on returns to education:
First, we establish causality of the treatment effect of education on earnings
by implementing generalized matching on a full set of observable individual
characteristics and unobserved personality traits. Second, since we observe
lifetime earnings data, our estimates of the IRR are direct and do not depend on
the assumptions that are usually made in order to justify the interpretation of
regression coefficients as rates of return.

For the males, the returns to education beyond high school are sizeable. For
example, the IRR for obtaining a bachelor's degree over a high school diploma is
11.1%, and for a doctoral degree over a bachelor's degree it is 6.7%. These
results are unique because they highlight the returns to high-ability and
high-education individuals, who are not well-represented in regular data sets.

Our results highlight the importance of personality and intelligence on our
outcome variables. We find that personality traits similar to the Big Five
personality traits are significant factors that help determine educational
attainment and lifetime earnings. Even holding the level of education constant,
measures of personality traits have significant effects on earnings. Similarly,
IQ is rewarded in the labor market, independently of education. Most of the
effect of personality and IQ on life-time earnings arise late in life, during
the prime working years. Therefore, estimates from samples with shorter
durations underestimate the treatment effects.

Here are a couple of interesting excerpts from the
paper:

... Our third contribution is to show how the effect of personality on earnings
varies through-out the men’s working lives. We find that without access to long
follow-up data, the estimated effect would be understated. Note that even though
the Terman sample has a restricted range of IQ, there is substantial variation
in personality. In fact, the Terman men do not differ from the general
population in terms of personality.

... note that even when controlling for rich background variables, IQ maintains
a statistically significant effect on lifetime earnings. Even though the effect
is slightly diminished from the un-controlled association of the first column,
it is still sizable. Malcolm Gladwell claims rather generally in his book
Outliers that for the Terman men, IQ did not matter once family background and
other observable personal characteristics were taken into account. While we do
not want to argue that IQ has a larger role for the difference between 50 and
100, for example, than for the difference between 150 and 200, we do want to
point out that even at the high end of the ability distribution, IQ has
meaningful consequences. [The syntax of this last sentence is strange.
Presumably the impact of IQ variation from 50 to 100 (from severely handicapped
to average) is larger than for 150 to 200, even though their results show a
significant effect even in the very high range.]

Below are some nice figures (click for larger
versions). Note the personality factor distribution among Termites was similar
to that of the overall population, whereas the IQ range was restricted due to
selection. Typical lifetime earnings for this group of exceptionally able men
ranged from $2 to $3 million in 2008 dollars.

Continued
in article

April 5, 2011 reply from Jim Fuehrmeyer

In my start group in Chicago over thirty years ago, there were six of us who
were Sells award winners including the gold medalist. The gold medalist could
take a test with the best of them but she couldn’t carry on an intelligent
conversation and she lacked the ability to make judgments. Like I tell my
students, accounting is not about solving problems; it’s about identifying the
problem to be solved. I’m sure some of the smartest PhDs you’ve known in your
career ended up being the poorest teachers; being smart doesn’t mean you can
communicate your knowledge to others effectively.

David Protess, a leading journalism professor at
Northwestern University known for his work investigating wrongfully
convicted individuals, has been in a high profile dispute with the
institution, which suspended his teaching duties this semester. Protess and
his supporters have accused the university of failing to protect his rights
as law enforcement officials have questioned his tactics. But on Wednesday,
the
Chicago Tribune reported, Northwestern
officials told faculty members that Protess had doctored records and lied
repeatedly to the journalism dean,

With all the steps required for changing the energy
saver preferences on a Mac, things can get a bit annoying. Fortunately,
MenuPrefs 2.6 can be quite helpful with this process. MenuPrefs provides a
"menu-bar-based front-end application" that gives users access to everything
from sound preferences to system access preferences. This version is
compatible with computers running Mac OS X 10.3 and newer.

Are you looking for a few more workspaces? Well,
look no further, as VirtuaWin 4.3 might be just the ticket. This virtual
desktop manager gives users the opportunity to organize applications over
several virtual desktops. Visitors should also note that there is a FAQ
section that is quite helpful, and there are a number of customizable icon
sets and modules that can also be used in conjunction with VirtuaWin. This
version is compatible with computers running Windows 95 and newer.

If you are using Twitter for your small business or
other related endeavor, you will also want to give TwitterFeed a look.
Visitors can sign up here to have their blog entries fed directly to their
Facebook or Twitter accounts, and they will also be able to use the
real-time stats feature. Also, visitors should check out TwitterFeed's own
in-house blog and the help section here. This version is compatible with all
operating systems.

Super Teacher Joe Hoyle lists the five biggest mistakes of teachers in
classrooms ---
http://joehoyle-teaching.blogspot.com/2011/03/big-mistakes.html
I might add that in terms of pedagogy Joe is almost 100% Socratic Method.
His criticisms tend to be somewhat more appropriate for Lecture Method
enthusiasts.
For example, using too much PowerPoint is often more of a problem of a lecturer
vis-a-vis a case method teacher.

The big question mark in Socratic Method is whether a teacher ultimately
certifies the best answers.
Former Harvard case method enthusiast Bill Bruns claimed to almost never give
his blessings on particular answers.
He felt students should walk away still debating in their heads the answers
given in case discussions by fellow students.
This is why "Teaching Notes" provided to instructors using Harvard Cases are
often terribly disappointing to instructors seeking answer sheets.
Perhaps this is why Tuck's Richard Sansing will not provide Teaching Notes to
cases that he shares on the AAA Commons.

There's not much credit given here to accounting
research, but mention is made of research on vocal intonations of CEOs and
CFOs on 1,647 earnings conference calls for 691 companies in 2007, a study
by Duke's accounting professors William Mayew Mohan Venkatachalam.

In late February, Charles Ferguson’s film – Inside
Job – won the Academy Award for Best Documentary. And now the film
documenting the causes of the 2008 global financial meltdown has made its
way online (thanks to the Internet Archive). A corrupt financial industry,
its corrosive relationship with politicians, academics and regulators, and
the trillions of damage done, it all gets documented in this film that runs
a little shy of 2 hours.

To watch the film, you will need to do the
following. 1.) Look at the bottom of the film. 2.) Click the forward button
twice so that it moves beyond the initial trailer and the Academy Awards
ceremony. 3.) Wait for the little circle to stop spinning. And 4.) click
play to watch film.

Inside Job (now listed in our Free Movie
Collection) can be purchased on DVD at Amazon. We all love free, but let’s
remember that good projects cost real money to develop, and they could use
real financial support. So please consider buying a copy.

Hopefully watching or buying this film won’t be a
pointless act, even though it can rightly feel that way. As Charles Ferguson
reminded us during his Oscar acceptance speech, we are three years beyond
the Wall Street crisis and taxpayers (you) got fleeced for billions. But
still not one Wall Street exec is facing criminal charges. Welcome to your
plutocracy…

AECM (Educators)
http://pacioli.loyola.edu/aecm/AECM is an email Listserv list which
provides a forum for discussions of all hardware and software
which can be useful in any way for accounting education at the
college/university level. Hardware includes all platforms and
peripherals. Software includes spreadsheets, practice sets,
multimedia authoring and presentation packages, data base
programs, tax packages, World Wide Web applications, etc

CPAS-L (Practitioners)
http://pacioli.loyola.edu/cpas-l/CPAS-L provides a forum for discussions of
all aspects of the practice of accounting. It provides an
unmoderated environment where issues, questions, comments,
ideas, etc. related to accounting can be freely discussed.
Members are welcome to take an active role by posting to CPAS-L
or an inactive role by just monitoring the list. You qualify for
a free subscription if you are either a CPA or a professional
accountant in public accounting, private industry, government or
education. Others will be denied access.

Yahoo
(Practitioners)
http://groups.yahoo.com/group/xyztalk
This forum is for CPAs to discuss the activities of the AICPA.
This can be anything from the CPA2BIZ portal to the XYZ
initiative or anything else that relates to the AICPA.